2018 Abbott Annual - Report

2018 ANNUAL REPORT
Abbott helps people around the world live TABLE OF CONTENTS

their best lives through good health, with a
diverse portfolio of products aligned with the 1 Letter to Shareholders
most important demographic and technological 6 This Is Abbott
trends in healthcare. Our life-changing 12 Diabetes Care
technologies keep hearts healthy, nourish bodies 14 Neuromodulation
at every stage of life, help people feel and move 16 Cardiac Rhythm Management
better, and deliver information, medicines and 18 Heart Failure Management
breakthroughs to manage peoples’ health. With 20 Vascular Care and Structural Heart
leadership positions in important treatment 22 Established Pharmaceuticals
areas, and a strong presence in the world’s 24 Laboratory Diagnostics
most rapidly growing regions, Abbott is well 26 Rapid Diagnostics
positioned to achieve continued above-market 28 Adult Nutrition
growth, strong cash flow, and consistently 30 Pediatric Nutrition
strong shareholder returns. 32 Financial Report
FRONT COVER STORY:
SADIE RUTENBERG As a participant in a clinical trial, Sadie was the first

Seattle, Washington child in the United States to receive Abbott’s Masters
HP 15mm, the world’s smallest rotatable mechanical
heart valve. Approved by the U.S Food and Drug
Administration in 2018, this dime-sized device can
be a life-saving option for critically ill children. Today,
Sadie is a happy, active toddler, who loves to tell new
friends about the “sparkle” in her heart.
MILES WHITE Chairman of the Board and Chief Executive Officer (right)
ROBERT FORD President, Chief Operating Officer (left)
Dear Fellow Our performance in 2018

Shareholder: demonstrated the Abbott model in
full. We built on strategic vision,
organic innovation, and managerial
discipline to deliver superior results.
In the face of global volatility,
Abbott again provided the reliability,
stability, productivity, and growth
that you expect from us.
ABBOTT 2018 ANNUAL REPORT
LET TER TO OUR SHAREHOLDERS
THE COMPANY with the future of health technology

Our excellent 2018 was a microcosm than ever before, as you’ll see through
of Abbott’s long history of sustained this report’s discussion of our leadership
>100% success and of the focused strategic in connected care – today’s most
shaping we’ve done in recent years to advanced and most personal medical
take it forward. And that’s exactly our technology. As a result, more than 50
5-YEAR TOTAL
SHAREHOLDER RETURN intent – we manage Abbott in a very percent of our sales today are from
deliberate way in order to accomplish products and businesses that are new to
very clear goals. the company in just the last six years.
Our foundational goal – the company’s BALANCE

purpose since its beginning – is to Abbott has been a diversified company
create life-changing technologies that for generations. We’ve always sought
help people live fuller lives through to have a broad range of opportunities
better health. We think that’s the – both because this provides more
best mission a company can have. ways to win, and because it insulates
We’re mindful of the privilege and the company from volatility in any
responsibility we have in producing particular market. Over time, each of
solutions that mean so much to so many. our major businesses has been affected
for better or for worse by factors in their
Because of this keen awareness of environments. But the balance amongst
the importance of our work, and of them has produced successful overall
the legacy we carry, we view our performance by Abbott, year after year.
Leading in business through the lens of long-term,
Connected Care sustainable success. While we work to PRESENCE
deliver high-quality results quarter by
We intend for Abbott to be a strong
quarter, we think in generational terms
and recognized presence worldwide –
and build Abbott to succeed for the long
Abbott is helping to build known by all our stakeholders for the
haul. To do so, we manage the company
the future of healthcare contributions we make to individuals
with unwavering concentration on four
and to society. We do this through our
with devices that let pillars that uphold our leadership:
broad geographic reach, with business
doctors remotely monitor today in more than 160 countries.
chronic conditions, helping RELEVANCE
Our decades of experience in key
reduce costs and improving The first and most important decision international markets have given us
patients’ quality of life. we make as a company is what deep local roots, with the majority
businesses to be in. We have shaped of our more than 100,000 colleagues
Abbott with great intentionality, located outside the U.S.
choosing to compete in fields that offer
+ Diabetes:
FreeStyle Libre
the highest potential for breakthrough
in healthcare and return on investment.
And we’re further building presence
by advancing our corporate identity to
+ Cardiac

Rhythm Management:
Confirm Rx
This is how we keep Abbott current
with its evolving environment and
new audiences in new ways. Through
high-visibility sponsorships, such as
+ Heart
deliver the greatest impact – for the the Abbott World Marathon Majors,
Failure:
people who use our products and for and through innovative multimedia
CardioMEMS HF System
our shareholders. Through purposeful advertising, we’ve reached more
management of our portfolio, we are than three billion people around the
now more innovative and better aligned world and have achieved the number-
2
WE’VE BUILT A one reputation rank with our target Leading positions allow us to drive
audiences in China and India. As the markets in which we compete. But
SUSTAINABLE a result, Abbott is better known our reputation rests on our excellence
GROWTH and respected than at any time in across the critical dimensions of
PLATFORM THAT our history. our operations. In 2018, Abbott was
recognized as a premier employer,
WILL CONTINUE EXECUTION as a top innovator, and as a leading
TO DRIVE SUCCESS Achievement is deep in Abbott’s culture; global citizen, being named to the Dow
Jones Sustainability Index for the 14th
FOR MANY YEARS but it’s not just an intangible – it’s built
consecutive year, the last six as the
in through systems that guarantee
TO COME sharp focus on the factors that keep leader in our industry. As a result of
the company successful. Our operating this success across our business, Abbott
systems – financial, quality, regulatory, has now been named Fortune’s Most
compensation, and others – are Admired Company in our industry for
designed to keep our standards high and the past six years.
the bar rising.
THE YEAR
For instance, thanks to our highly 2018 provided a textbook example of
successful cash-flow-improvement how Abbott works. With our recent
initiative – which helped us generate strategic additions now fully integrated,
more than $6 billion in operating cash our focus was on running the company
flow last year – we’ve been able to pay we’ve built. The result was an excellent
down debt from our recent acquisitions year by every key measure.
Aligned with much faster than originally planned.
Important Trends The resulting balance sheet gives us All four of our major businesses
renewed strategic flexibility. performed well, leading Abbott to
deliver strong organic sales growth
LEADERSHIP of more than seven percent, (11.6%
The result of this structured on a GAAP basis), which exceeded
As healthcare needs grow approach is leadership across multiple the expectations we established at
and change around the dimensions of our business. Our goal the beginning of the year. This drove
world, Abbott works to is to have the number-one or number- earnings-per-share at the top end of the
stay ahead of those trends two position in our markets. Thanks to range we forecast, despite headwinds
and respond with relevant, the breakthrough success of FreeStyle from international currency.
localized solutions. Libre, our glucose-monitoring system
that has become our latest billion- We returned $2 billion to shareholders
By understanding the last year and, in December, announced
challenges, tastes, customs, dollar product, we are now the world’s
leading company in glucose testing a dividend increase of more than 14
and environments that percent. Abbott has now paid dividends
impact the health of for diabetes. This is in addition to our
global leadership positions in coronary for 95 consecutive years and has raised
people in each market, we them for the last 47 years in a row.
can target uniquely local stents, transcatheter mitral-valve
repair, left ventricular assist devices, Combined with share-price growth of
problems. more than 25 percent, this produced a
spinal cord stimulation, branded-
Today, Abbott is well generic medicines, adult nutrition, total shareholder return of nearly 30
positioned in markets where blood transfusion and screening, and percent, which was at the top of our
healthcare needs are great point-of-care diagnostic testing. peer group of companies.
and growing fast.
3
LET TER TO OUR SHAREHOLDERS
Growth of this magnitude is rare for Sustainability is the guiding principle

companies of our size, particularly as in our management approach. Our
>50%
it follows an increase of more than 50 commitment is that Abbott will be
percent in 2017. here, delivering the many benefits
it provides to the people we serve.
THE FUTURE This commitment takes many
forms. It means that we invest in
For the past 20 years we have
capabilities for the future, not only
of 2018 sales came from
consistently pursued a vision of the
in our pipeline of market-leading products and businesses
company we want Abbott to be and
the impact we intend to have on the innovations, but also in ways such new to Abbott in the last
world. The result is a sustainable as the additional manufacturing six years.
growth platform that will continue to capacity we’re building to support the
drive success for many years to come. dynamic growth of FreeStyle Libre
and our Alinity family of diagnostic
systems. It means that we continually
refine our operations to reduce our
environmental footprint. It means As this report and our strong 2018
that we invest in our people to attract performance make clear, Abbott
and develop the talent we need to has learned from its successful past,
maintain Abbott’s high standards, stands at a new peak in the present,
and that we continually strengthen and is poised for a future that goes
our organization for optimal farther and higher still. The future
performance. of healthcare is extraordinary – and
Abbott is leading the way.
In 2018, we enhanced our leadership
structure with the appointment
of Robert Ford as President and
Shaping Our Future Chief Operating Officer. We’ve had
with Life-Changing COOs from time to time, when the
business has called for that role in our
Technologies structure; with the increasing scale
MILES D. WHITE
Chairman of the Board and
and complexity of our business, we Chief Executive Officer
deemed this to be such a time. Robert March 4, 2019
Next-generation products is a long-time Abbott veteran, with
and services are helping broad experience across our global
Abbott increase share businesses, who most recently led our
and generate above-market largest business, Medical Devices, and
growth in important oversaw our integration of St. Jude
treatment areas Medical, our largest-ever acquisition.
Having our businesses report to him
gives us more managerial flexibility
and strengthens us operationally.
4
2018 FINANCIAL HIGHLIGHTS
WORLDWIDE SALES
$30.6B
1
ORGANIC SALES GROWTH
7.3%
2
ADJUSTED EARNINGS PER SHARE
$2.88
3
ADJUSTED EARNINGS PER SHARE GROWTH
15.2%
1-YEAR TOTAL SHAREHOLDER RETURN
~30%
1
On a GAAP basis, Abbott sales increased 11.6%
2
Full-year 2018 GAAP diluted EPS from continuing operations $1.31
3
GAAP EPS growth 555%
For full financial data and reconciliation of non-GAAP measures, please see
Abbott’s 2018 earnings press release at www.abbottinvestor.com
5
THIS IS DIFFERENCE
ABBOTT: MAKING.
6
LIFE GROWTH
CHANGING. DRIVING.
7
RELEVANCE BALANCE
We’ve aligned our business with We’ve created a complementary

important scientific, medical, mix of businesses, serving a
demographic, and social trends. variety of customer types.
BUILT
TO LEAD.
8
PRESENCE EXECUTION
We have a long-established, We’ve built a culture – and

highly visible presence in the systems – that guarantee sharp
world’s largest and fastest- focus and drive high performance.
growing markets.
Over the past five years, Abbott

has executed a focused strategy to
position the company for sustained,
accelerated growth.
9
10
Abbott is in the business of life.

The company we’ve built, and the
products we develop, help people of
all ages live their best possible lives
through better health.
TO THE FULLEST.
11
LIFE-CHANGING
INNOVATION
FOR PEOPLE WITH
DIABETES
FREESTYLE LIBRE: BREAKTHROUGH
GLUCOSE-MONITORING TECHNOLOGY
Abbott is the global leader in continuous glucose monitoring.
Our FreeStyle Libre 14-day system is changing the way people
have tested their glucose levels for decades. The system uses a
small sensor – the size of just two stacked quarters – applied
to the back of the upper arm. This device can provide real-
time glucose readings, day and night, for up to 14 days – all
without the pain of fingersticks. The FreeStyle Libre system
provides three critical pieces of data with each scan – a
real-time glucose result, an eight-hour historical trend, and
a directional trend arrow showing where glucose levels are
headed – to help users better manage their diabetes. Studies
show that users who scan more frequently experience
improved average glucose levels.* FreeStyle Libre is available
in every major market in the world and has more than one
million users.
*References: Ajjan, R. Insights from real world use of flash continuous glucose
monitoring. Symposium conducted at: 78th Scientific Sessions of the American
Diabetes Association; June 22 – 26, 2018; Orlando, FL.
A GROWING NEED
Diabetes prevalence has been increasing in both
developed and developing markets.
LEADING IN
Global diabetes prevalence is expected to rise significantly.
CONNECTED CARE
2017 450 M
>50% The FreeStyle LibreLink and
LibreLinkUp** smartphone apps let people
2045
OF PEOPLE WITH monitor their glucose without the use
629 M DIABETES ARE
CURRENTLY of a separate device, then share their data
0 100 200 300 400 500 600 700 M UNDIAGNOSED with caregivers remotely.
Source: IDF Diabetes Atlas 8th edition 2017 **LibreLinkUp is not yet available in the United States
12
MELISSA POLOVIN
DEERFIELD, ILLINOIS, USA
Since being diagnosed with diabetes in her early 20s, Melissa
had endured the pain and inconvenience of multiple daily finger-
sticks as she worked to monitor and control her glucose levels.
She describes her FreeStyle Libre system as “life-changing.”
Because it’s so easy to use, Melissa feels that the device helps her
better control her diabetes and live her life.
13
For people challenged by stimulation for patients seeking Abbott’s proprietary BurstDR
chronic pain or movement relief from complex regional stimulation waveform, which
disorders, Abbott offers a pain syndrome or nerve pain is designed to mimic how pain
portfolio of technologies following surgery or injury. signals travel to the brain. Our
designed to help them get The Proclaim SCS System is Infinity Deep Brain Stimulation
back to living their lives. Our also the first upgradeable and (DBS) system addresses
Proclaim devices deliver spinal- recharge-free spinal-cord symptoms of Parkinson’s
cord stimulation (SCS) for stimulation system capable of disease and essential tremor
the management of chronic delivering both the standard using mild pulses of electricity
pain, and dorsal-root-ganglion tonic stimulation waveform and to the brain.
ADVANCED TECHNOLOGY
TO MANAGE CHRONIC PAIN
AND MOVEMENT DISORDERS
Infinity DBS was Both our Infinity and Proclaim platforms

the first deep-brain- use Bluetooth® wireless technology
stimulation system and iOS‡ software to offer patients an
available to offer intuitive therapy experience
directional leads to
potentially reduce
side effects.
Bluetooth is a registered
trademark of Bluetooth SIG, Inc
‡ indicates a third-party
trademark, which is property
of its respective owner.
14
6 MILLION
people are
affected
by Parkinson’s
disease
MELISSA
AND EDWARD HAHN
WADING RIVER,
NEW YORK, USA
Melissa Hahn and her father,
Edward, both experienced
debilitating tremors
from Parkinson’s disease.
Then Melissa’s doctor
recommended treatment with
Abbott’s Infinity DBS system.
After having the device
implanted, Melissa found that
her tremors were significantly
reduced. “It gave me my life
back,” she says. Edward, upon
seeing the positive impact
the device had for his
daughter, had it implanted
as well and has also seen
improvement.
15
SETTING THE PACE

IN CARDIAC RHYTHM
MANAGEMENT
MARIA ROSARIO RODRIGUEZ

MADRID, SPAIN
For most of her life, Maria Rosario has experienced heart
arrhythmias. Last year, her doctors were sufficiently concerned
that they suggested the use of Abbott’s Confirm Rx ICM to
help them better understand her condition. Using the device’s
Bluetooth® connectivity and an app on her smartphone, they
were able to remotely monitor her heart rhythms, letting them
more confidently determine treatment options.
16
Abbott is working to transform the treatment

of cardiac arrhythmias (irregular heartbeats)
with innovative technologies like the Confirm Rx
Insertable Cardiac Monitor (ICM), the world’s
first smartphone-compatible ICM. The Confirm Rx
system provides real-time access to patient data,
letting physicians remotely identify even the most
difficult-to-detect cardiac arrhythmias.
We also offer the EnSite Precision cardiac mapping

system, designed to aid in the rapid diagnosis of
cardiac arrhythmias; a full portfolio of cardiac
ablation catheters; the Advisor HD Grid mapping
catheter, which uses a first-of-its-kind electrode
configuration, capturing and analyzing data in
new ways to create more highly detailed maps
of the heart, which may result in more safe and
effective treatments; and the Assurity MRI
pacemaker, which combines small size with
outstanding longevity, to help patients experience
fewer complications and less discomfort.
> 33 MILLION
people in the world experience
atrial fibrillation.
Source: Centers for Disease Control and Prevention, Worldwide Epidemiology of
Atrial Fibrillation, a Global Burden of Disease 2010
LEADING IN
CONNECTED
CARE
Our Confirm Rx Insertable
Cardiac Monitor is the CONFIRM RX
world’s first smartphone- Insertable
compatible ICM Cardiac Monitor
17
CARDIOMEMS LEADING IN
HF System
CONNECTED CARE
Our CardioMEMS sensor, which is roughly
the size of a paperclip, is implanted in the
pulmonary artery. It connects with a remote
monitoring system that communicates
important information to the doctor without
the need for an office visit.
A COMPREHENSIVE
APPROACH
TO HEART-FAILURE
MANAGEMENT
Abbott is the market leader in left ventricular In 2018, HeartMate 3 LVAD was approved
assist devices (LVADs), mini heart pumps for long-term use in patients who are not
for patients in advanced-stage heart failure viable candidates for a heart transplant. In
whose hearts need continuous support. Our addition to these life-saving devices, we
HeartMate 3 LVAD is the first implantable offer a comprehensive portfolio of heart-
device of its kind to use Full MagLev flow failure-management products that span
technology, a proprietary pumping system the continuum of care, from monitoring
designed to reduce trauma to the blood for symptoms to advanced-stage therapy.
passing through the pump while optimizing Our innovations in this area include the
blood flow. Improved blood flow can revolutionary CardioMEMS pulmonary-artery
help minimize complications that can be pressure monitor and remote monitoring
associated with LVAD therapy, ultimately system, as well as specialized pacemakers
improving the patient’s quality of life. designed for treating heart failure.
18
A COMPREHENSIVE HEART-FAILURE-
26 million MANAGEMENT PORTFOLIO

• CardioMEMS HF System – Pulmonary Artery Pressure Monitor
people worldwide suffer • Quadra Allure MP/Quadra Assura MP – Cardiac
from heart failure Resynchronization Therapies
• Merlin.net Patient Care Network and Merlin@home Transmitter
• HeartMate 3 LVAD – Left Ventricular Assist Device
LOREN VINAL
CORNING,
NEW YORK, USA
When Loren began having
breathing problems, he
was surprised to learn
that his heart was failing.
He’s a strong candidate
for a heart transplant
sometime in the future.
In the meanwhile, Abbott’s
HeartMate 3 LVAD has
helped him get back
to doing many of the
things he loves, including
photography, playing
guitar, and spending time
with his partner, Sandy.
19
OPTIS Integrated
Imaging System
XIENCE
SIERRA
Stent System
MARKET-LEADING
TECHNOLOGIES
TO RESTORE BLOOD
FLOW OR REPAIR
HEART DEFECTS
• XIENCE family of drug-eluting stents Abbott’s Vascular business provides minimally
• Optis integrated imaging system invasive products for the treatment of coronary
KEY
• PressureWire family of pressure- and peripheral artery disease. Our extensive
VASCULAR
sensing guidewires portfolio includes market-leading drug-eluting
PRODUCTS
• Hi-Torque family of guide wires stents, bare-metal stents, coronary guide wires,
• Supera peripheral-stent system balloon dilatation catheters, and imaging
technology that can provide highly-detailed, 3D
• Command guide wires
color views of blood vessels, which can improve
• Perclose ProGlide vascular- success when opening a blocked artery.
closure system
20
MITRACLIP
Valve-Repair Device
MASAE OGIWARA
KAMI, JAPAN
Masae was definitely not

ready to slow down. He
enjoyed working on his
farm, walking his dog, Pal,
and spending time with his
daughter, Jun. But a leaky
mitral valve had made it
difficult to do even simple
things like climbing a flight
of stairs. Once he received
Abbott’s MitraClip as a
participant in a clinical trial in
early 2018, he felt his energy
return, letting him get back
to the active life he loves.
In our Structural Heart business, our MitraClip device significantly recurrent ischemic stroke in patients
technologies include MitraClip, our reduced death among people whose who had a small opening between the
leading transcatheter mitral-valve- advanced heart failure had resulted in upper chambers of the heart. And our
repair device, mechanical and tissue leaky mitral valves. The new data also Amplatzer Amulet, which is available
valves, transcatheter aortic-valve- showed that MitraClip lowered this in Europe, closes a small pouch in
replacement and structural-heart group’s heart-failure hospitalization the heart to reduce the risk of stroke
occluder therapies. In 2018, Abbott rates and improved their quality of in people with atrial fibrillation who
announced the results of a large-scale life. Our Amplatzer PFO Occluder cannot rely on blood thinners.
clinical trial demonstrating that has been proven to reduce the risk of
21
TRUSTED BRANDS
MEDICINES
FOR THE WORLD’S GLOBAL STRENGTH
Abbott is a leading
FASTEST-GROWING pharmaceutical company in

India, Russia, and across Latin
MARKETS
America – with #1 positions in
Chile, Colombia, and Peru
In our branded-generic medicines business, high quality

standards, reliable supply chain, clinical science, broad
product range, value-added services, and patient-centered
innovation allow us to differentiate ourselves from pure
generic competitors and provide value for patients. Every
day, more than 14 million people around the world use our
medicines to help them live healthier lives.
We offer market-specific product portfolios that reflect

the health needs of each region, and cover a wide range of
conditions and medical needs, including cardiovascular
(Lipanthyl, Tarka, Synthroid), gastrointestinal (Creon,
Duphalac, Dicetel), and women’s health (Duphaston,
Femoston). And we continually employ local market insights
to drive innovations in formulation, packaging, and new
indications that help us better address regional health needs.
DAGOBERTO LOPEZ BOGOTÁ, COLOMBIA

When he was diagnosed, in 2015, Dagoberto’s doctors
told him his cancer had been caught early, and they started
him on Abbott’s ETERSA right away. Since that time, he’s
been feeling well. He believes that’s because he received
the drug before the disease had a significant impact on his
health. Today, he’s retired from work, so he likes to keep
active, riding his bike, taking long walks, and exercising in a
park near his home.
ETERSA (Dasatinib) is a treatment

for chronic myeloid leukemia.
22
>1,500 products
Abbott’s continually expanding portfolio
covers a range of therapeutic areas,
including gastroenterology, women’s
health, cardiology, and metabolic disorders,
as well as specialty and primary care
23
GAME-CHANGING SAGHAR MISSAGHIAN-CULLY

LABORATORY ADMINISTRATOR,
SOLUTIONS FOR LONDON, ENGLAND
DIAGNOSTICS
clinical
chemistry
informatics immunoassay
ALINITY
point of care hematology
molecular transfusion
A UNIFIED FAMILY OF INTEGRATED SYSTEMS

DESIGNED TO STREAMLINE LABORATORY
OPERATIONS AND HELP LABS ACHIEVE MEASURABLY
BETTER PERFORMANCE
BUILDING ON OUR LEADERSHIP

IN LABORATORY TESTING
In 2018, Abbott strengthened its position in diagnostics
with the continued roll-out of Alinity, our groundbreaking
range of instrument platforms, tests and services. As global
testing volumes rise, health systems are facing increasing
pressures to perform testing as efficiently as possible with BUILDING
limited staff and space. The Alinity family addresses these THE LAB
challenges with speed, accuracy, and a smaller footprint. OF THE
Abbott is also working with hospitals to transform the lab FUTURE
by collaborating to find solutions that help deliver better
care to patients.
*Alinity hq, Alinity hs, Alinity m, and i-STAT Alinity are not yet
commercially available in the United States for diagnostic use. Alinity m
instrument is CE marked, assays are in development. Alinity s is not yet
cleared for use in the United States and not authorized for sale in Canada.
24
In her role as Managing Director, for North West London Pathology, hosted by the Imperial
College Healthcare NHS Trust in London, Saghar is charged with ensuring that the laboratories
under her direction operate as efficiently as possible so they can deliver the critical information
needed to help make optimal healthcare decisions. She relies on Abbott’s systems to provide high-
throughput analysis to deliver fast, accurate, and cost-efficient results.
#1 ~70% 60%
• BLOOD SCREENING OF CRITICAL CLINICAL OF THE WORLD’S
• POINT-OF-CARE PORTFOLIO DECISIONS ARE DONATED BLOOD AND
• HIV TESTING INFLUENCED BY PLASMA IS SCREENED
• INFECTIOUS-DISEASE DIAGNOSTIC TEST RESULTS BY ABBOTT SYSTEMS
TESTING
AND TESTS
25
RAPID DIAGNOSTICS
EXPANDING ACCESS TO CARE
AROUND THE WORLD
Our complete portfolio

of rapid HIV tests can
help healthcare workers
across the world diagnose
individual infection,
prevent mother-to-
HIV STRIP child transmission, and
TESTS
monitor HIV prevalence.
Abbott is the world’s leading provider of Key products in our Rapid Diagnostics
rapid point-of-care tests, with a focus on portfolio include the ID NOW platform,
cardiometabolic disease, infectious disease, which offers molecular-based tests for the
and toxicology. Our portable strip tests, influenza A&B viruses, as well as Strep A
along with our benchtop systems and and Respiratory Syncytial Virus (RSV); the
analyzers, can provide immediate, actionable Afinion 2 platform, which provides a
information, contributing to better clinical, common series of cardiometabolic tests;
operational, and economic outcomes. and our eScreen business, which provides
next-generation employment-screening
applications to help companies ensure their
employees are healthy and drug-free.
26
THE KIKA TROUPE

KAMPALA, UGANDA
Founded by Kaddu Yusuf, the Kika Troupe is helping to
change the narrative around HIV/AIDS in Uganda. Every
member of the troupe has been impacted in some way by
the country’s HIV epidemic. Many of them are regularly
tested using Abbott’s rapid tests to help them stay as
healthy as possible.
27
BALANCED AND TARGETED

NUTRITION FOR ACTIVE LIVES
Proper nutrition is the foundation of health. That’s why Juven supports wound healing, including in those
we develop science-based nutritional products to meet recovering from injury or surgery. Nepro is formulated
a variety of needs at every stage of life. Our Ensure line for people with kidney disease. We also offer products
of products provides complete, balanced, and targeted for tube feeding, including Jevity for complete, balanced
nutrition to help people stay active and healthy, as well as nutrition; Vital, for patients experiencing malabsorption,
support recovery from illness, injury, or surgery. Glucerna maldigestion, or impaired gastro-intestinal function; and
shakes and bars are formulated for people with diabetes. Pivot, for metabolically stressed patients who could benefit
from an immune-modulating enteral formula.
28
MAKEBA GILES Makeba is a lifestyle blogger and the busy mom of

ST. LOUIS, MISSOURI, USA four kids. With a schedule as full as hers, she doesn’t
always have time to eat right. She often relies on Ensure
Max Protein to provide the balanced nutrition she needs.
#1 >8 million people

WORLD LEADER
IN ADULT rely on Abbott’s Adult and Medical
NUTRITION Nutrition products every day
ENSURE MAX PROTEIN HELPS ADULTS

STAY HEALTHY AND STRONG
More than 1 in 3 adults over the age of 50 don’t get the
ENSURE protein they need.* In 2018, Abbott introduced Ensure
MAX Max Protein, a 150-calorie nutrition drink with 30
PROTEIN grams of high-quality protein and 1 gram of sugar to
help adults reach their health goals.
*Krok-Schoen, J et al: Low Dietary Protein Intakes and Associated Eating Behaviors in an Aging 29
Population: a NHANES Analysis. ASPEN 2018 Nutrition Science and Practice Conference.
SIMILAC
PRO-ADVANCE,
PRO-SENSITIVE AND
PRO-TOTAL COMFORT
The first infant formula
with 2’-FL Human Milk
Oligosaccharide (HMO),
25
an immune-nourishing
KEY
prebiotic PRODUCT
LAUNCHES
IN 2018
#1
We are the market leader
in Pediatric Nutrition
in the U.S. and
many international
markets
A STRONG START FOR

CHILDREN AROUND THE WORLD
Every day, 11.5 million babies and children – and replenish vital fluids and electrolytes; PediaSure, our
their parents – rely on Abbott nutrition products. Our complete, balanced nutritional drink designed with
broad offering includes our line of Similac infant and the optimal balance of protein, carbohydrates, vitamins
toddler formulas, which support healthy growth and and minerals; and Eleva, the leading organic infant
development; Pedialyte, our advanced rehydration formula in China.
solution specially formulated to help kids and adults
30
DR. OLIVIA ORTIZ Dr. Ortiz, a busy pediatric specialist, has three
RAMIREZ WITH very active children. She has relied on Similac to
HER TWINS, DAMIÁN
help each of them grow and thrive. Today, she
AND ANITA
MEXICO CITY, MEXICO supplements her twins’ diet with Similac 3 to make
sure they’re getting all the nutrition they need.
31
2018 FINANCIAL
REPORT
33 Consolidated Statement of Earnings 60 Report of Independent Registered

Public Accounting Firm
34 Consolidated Statement of
Comprehensive Income 61 Report of Independent Registered
Public Accounting Firm
35 Consolidated Statement of Cash Flows
62 Financial Instruments and
36 Consolidated Balance Sheet Risk Management
38 Consolidated Statement of 63 Financial Review
Shareholders’ Investment
77 Performance Graph
39 Notes to Consolidated
Financial Statements 78 Summary of Selected Financial Data
60 Management Report on Internal 79 Directors and Corporate Officers

Control Over Financial Reporting
80 Shareholder and Corporate Information
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C O N S O L I D AT E D S TAT E M E N T O F E A R N I N G S
(in millions except per share data)
Year Ended December 31 2018 2017 2016

Net Sales $30,578 $27,390 $20,853
Cost of products sold, excluding amortization of intangible assets 12,706 12,409 9,094
Amortization of intangible assets 2,178 1,975 550
Research and development 2,300 2,260 1,447
Selling, general and administrative 9,744 9,182 6,736
Total Operating Cost and Expenses 26,928 25,826 17,827
Operating Earnings 3,650 1,564 3,026
Interest expense 826 904 431
Interest income (105) (124) (99)
Net foreign exchange (gain) loss 28 (34) 495
Debt extinguishment costs 167 — —
Other (income) expense, net (139) (1,413) 786
Earnings from Continuing Operations Before Taxes 2,873 2,231 1,413
Taxes on Earnings from Continuing Operations 539 1,878 350
Earnings from Continuing Operations 2,334 353 1,063
Earnings from Discontinued Operations, net of taxes 34 124 321

Gain on sale of Discontinued Operations, net of taxes — — 16
Net Earnings from Discontinued Operations, net of taxes 34 124 337
Net Earnings $÷2,368 $÷÷«477 $÷1,400
Basic Earnings Per Common Share —

Continuing Operations $÷÷1.32 $÷÷0.20 $÷÷0.71
Discontinued Operations 0.02 0.07 0.23
Net Earnings $÷÷1.34 $÷÷0.27 $÷÷0.94
Diluted Earnings Per Common Share —

Continuing Operations $÷÷1.31 $÷÷0.20 $÷÷0.71
Discontinued Operations 0.02 0.07 0.23
Net Earnings $÷÷1.33 $÷÷0.27 $÷÷0.94
Average Number of Common Shares Outstanding Used for Basic

Earnings Per Common Share 1,758 1,740 1,477
Dilutive Common Stock Options 12 9 6
Average Number of Common Shares Outstanding Plus Dilutive
Common Stock Options 1,770 1,749 1,483
Outstanding Common Stock Options Having No Dilutive Effect — — 5
The accompanying notes to consolidated financial statements are an integral part of this statement.
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C O N S O L I D AT E D S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E
(in millions)

Net Earnings $«2,368 $÷÷477 $«1,400
Foreign currency translation gain (loss) adjustments (1,460) 1,365 (130)
Net actuarial gains (losses) and prior service cost and credits and amortization
of net actuarial losses and prior service cost and credits, net of taxes of
$47 in 2018, $(61) in 2017 and $(125) in 2016 132 (243) (326)
Unrealized gains (losses) on marketable equity securities, net of taxes of
$(76) in 2017 and $(28) in 2016 — 64 (134)
Net gains (losses) on derivative instruments designated as cash flow hedges,
net of taxes of $50 in 2018, $(43) in 2017 and $(4) in 2016 136 (134) (15)
Other Comprehensive Income (Loss) (1,192) 1,052 (605)
Comprehensive Income $«1,176 $«1,529 $÷÷795
Supplemental Accumulated Other Comprehensive Income (Loss) Information,

net of tax as of December 31:
Cumulative foreign currency translation (loss) adjustments $(4,912) $(3,452) $(4,959)
Net actuarial (losses) and prior service (cost) and credits (2,726) (2,521) (2,284)
Cumulative unrealized gains (losses) on marketable equity securities — (5) (69)
Cumulative gains (losses) on derivative instruments designated as
cash flow hedges 52 (84) 49
Accumulated other comprehensive income (loss) $(7,586) $(6,062) $(7,263)
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C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S
(in millions)

Cash Flow From (Used in) Operating Activities:
Net earnings $÷«2,368 $÷÷÷477 $ 1,400
Adjustments to reconcile earnings to net cash from operating activities —
Depreciation 1,100 1,046 803
Amortization of intangible assets 2,178 1,975 550
Share-based compensation 477 406 310
Impact of currency devaluation — — 480
Amortization of inventory step-up 32 907 —
Investing and financing losses, net 126 47 86
Loss on extinguishment of debt 167 — —
Amortization of bridge financing fees — 5 165
Gains on sale of businesses — (1,163) (25)
Mylan N.V. equity investment adjustment — — 947
Gain on sale of Mylan N.V. shares — (45) —
Trade receivables (190) (207) (177)
Inventories (514) 249 (98)
Prepaid expenses and other assets 23 109 113
Trade accounts payable and other liabilities 747 615 (652)
Income taxes (214) 1,149 (699)
Net Cash From Operating Activities 6,300 5,570 3,203
Cash Flow From (Used in) Investing Activities:

Acquisitions of property and equipment (1,394) (1,135) (1,121)
Acquisitions of businesses and technologies, net of cash acquired — (17,183) (80)
Proceeds from business dispositions 48 6,042 25
Proceeds from the sale of Mylan N.V. shares — 2,704 —
Purchases of investment securities (131) (210) (2,823)
Proceeds from sales of investment securities 73 129 3,709
Other 48 35 42
Net Cash From (Used in) Investing Activities (1,356) (9,618) (248)
Cash Flow From (Used in) Financing Activities:

Proceeds from issuance of (repayments of ) short-term debt and other (26) (1,034) (1,767)
Proceeds from issuance of long-term debt and debt with maturities
over 3 months 4,009 6,742 14,934
Repayments of long-term debt and debt with maturities over 3 months (12,433) (8,650) (12)
Payment of bridge financing fees — — (170)
Purchase of Alere preferred stock — (710) —
Acquisition and contingent consideration payments related to business
acquisitions — (13) (25)
Purchases of common shares (238) (117) (522)
Proceeds from stock options exercised 271 350 248
Dividends paid (1,974) (1,849) (1,539)
Net Cash From (Used in) Financing Activities (10,391) (5,281) 11,147
Effect of exchange rate changes on cash and cash equivalents (116) 116 (483)
Net Increase (Decrease) in Cash and Cash Equivalents (5,563) (9,213) 13,619
Cash and Cash Equivalents, Beginning of Year 9,407 18,620 5,001
Cash and Cash Equivalents, End of Year $÷«3,844 $÷«9,407 $18,620
Supplemental Cash Flow Information:
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Income taxes paid $÷÷÷740 $÷÷÷570 $ 620

Interest paid 845 917 181
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C O N S O L I D AT E D B A L A N C E S H E E T
(dollars in millions)
December 31 2018 2017

Assets
Current Assets:
Cash and cash equivalents $÷3,844 $÷9,407
Investments, primarily bank time deposits and U.S. treasury bills 242 203
Trade receivables, less allowances of — 2018: $314; 2017: $294 5,182 5,249
Inventories:
Finished products 2,407 2,339
Work in process 499 472
Materials 890 790
Total inventories 3,796 3,601
Other prepaid expenses and receivables 1,559 1,667
Current assets held for disposition 9 20
Total Current Assets 14,632 20,147
Investments 897 883
Property and Equipment, at Cost:

Land 501 526
Buildings 3,555 3,613
Equipment 10,756 10,394
Construction in progress 894 732
15,706 15,265
Less: accumulated depreciation and amortization 8,143 7,658
Net Property and Equipment 7,563 7,607
Intangible Assets, net of amortization 18,942 21,473

Goodwill 23,254 24,020
Deferred Income Taxes and Other Assets 1,868 1,944
Non-current Assets Held for Disposition 17 176
$67,173 $76,250
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C O N S O L I D AT E D B A L A N C E S H E E T
(dollars in millions)
December 31 2018 2017

Liabilities and Shareholders’ Investment
Current Liabilities:
Short-term borrowings $÷÷«200 $÷÷«206
Trade accounts payable 2,975 2,402
Salaries, wages and commissions 1,182 1,187
Other accrued liabilities 3,780 3,811
Dividends payable 563 489
Income taxes payable 305 309
Current portion of long-term debt 7 508
Total Current Liabilities 9,012 8,912
Long-term Debt 19,359 27,210
Post-employment obligations and other long-term liabilities 8,080 9,030
Commitments and Contingencies
Shareholders’ Investment:
Preferred shares, one dollar par value
Authorized — 1,000,000 shares, none issued — —
Common shares, without par value
Authorized — 2,400,000,000 shares
Issued at stated capital amount —
Shares: 2018: 1,971,189,465; 2017: 1,965,908,188 23,512 23,206
Common shares held in treasury, at cost —
Shares: 2018: 215,570,043; 2017: 222,305,719 (9,962) (10,225)
Earnings employed in the business 24,560 23,978
Accumulated other comprehensive income (loss) (7,586) (6,062)
Total Abbott Shareholders’ Investment 30,524 30,897
Noncontrolling Interests in Subsidiaries 198 201
Total Shareholders’ Investment 30,722 31,098
$67,173 $76,250
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C O N S O L I D AT E D S TAT E M E N T O F S H A R E H O L D E R S ’ I N V E S T M E N T
(in millions except shares and per share data)

Common Shares:
Beginning of Year
Shares: 2018: 1,965,908,188; 2017: 1,707,475,455; 2016: 1,702,017,390 $«23,206 $«13,027 $«12,734
Issued under incentive stock programs
Shares: 2018: 5,281,277; 2017: 8,834,924; 2016: 5,458,065 163 242 222
Issued for St. Jude Medical acquisition
Shares: 2017: 249,597,809 — 9,835 —
Share-based compensation 479 406 311
Issuance of restricted stock awards (336) (304) (240)
End of Year
Shares: 2018: 1,971,189,465; 2017: 1,965,908,188; 2016: 1,707,475,455 $«23,512 $«23,206 $«13,027
Common Shares Held in Treasury:

Beginning of Year
Shares: 2018: 222,305,719; 2017: 234,606,250; 2016: 229,352,338 $(10,225) $(10,791) $(10,622)
Issued under incentive stock programs
Shares: 2018: 8,870,735; 2017: 8,696,320; 2016: 5,398,469 408 400 250
Issued for St. Jude Medical acquisition
Shares: 2017: 3,906,848 — 180 —
Purchased
Shares: 2018: 2,135,059; 2017: 302,637; 2016: 10,652,381 (145) (14) (419)
End of Year
Shares: 2018: 215,570,043; 2017: 222,305,719; 2016: 234,606,250 $÷(9,962) $(10,225) $(10,791)
Earnings Employed in the Business:

Beginning of Year $«23,978 $«25,565 $«25,757
Net earnings 2,368 477 1,400
Cash dividends declared on common shares (per share —
2018: $1.16; 2017: $1.075; 2016: $1.045) (2,047) (1,947) (1,547)
Effect of common and treasury share transactions (90) (117) (45)
Impact of adoption of new accounting standards 351 — —
End of Year $«24,560 $«23,978 $«25,565
Accumulated Other Comprehensive Income (Loss):

Beginning of Year $÷(6,062) $÷(7,263) $÷(6,658)
Business dispositions / separation — 149 —
Other comprehensive income (loss) (1,192) 1,052 (605)
Impact of adoption of new accounting standards (332) — —
End of Year $÷(7,586) $÷(6,062) $÷(7,263)
Noncontrolling Interests in Subsidiaries:

Beginning of Year $÷÷÷201 $÷÷÷179 $÷÷÷115
Noncontrolling Interests’ share of income, business combinations,
net of distributions and share repurchases (3) 22 64
End of Year $÷÷÷198 $÷÷÷201 $÷÷÷179
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N O T E S T O C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES indefinitely reinvested in foreign operations. Interest and penalties
Nature of Business—Abbott’s principal business is the discovery, on income tax obligations are included in taxes on earnings.
development, manufacture and sale of a broad line of health care Earnings Per Share—Unvested restricted stock units and awards
products. that contain non-forfeitable rights to dividends are treated as
Basis of Consolidation—The consolidated financial statements participating securities and are included in the computation of
include the accounts of the parent company and subsidiaries, after earnings per share under the two-class method. Under the two-
elimination of intercompany transactions. class method, net earnings are allocated between common shares
and participating securities. Earnings from Continuing Operations
Use of Estimates—The consolidated financial statements have been allocated to common shares in 2018, 2017 and 2016 were
prepared in accordance with generally accepted accounting prin- $2.320 billion, $346 million and $1.057 billion, respectively. Net
ciples in the United States and necessarily include amounts based earnings allocated to common shares in 2018, 2017 and 2016 were
on estimates and assumptions by management. Actual results $2.353 billion, $468 million and $1.393 billion, respectively.
could differ from those amounts. Significant estimates include
amounts for sales rebates; income taxes; pension and other post- Pension and Post-Employment Benefits—Abbott accrues for the
employment benefits, including certain asset values that are based actuarially determined cost of pension and post-employment
on significant unobservable inputs; valuation of intangible assets; benefits over the service attribution periods of the employees.
litigation; derivative financial instruments; and inventory and Abbott must develop long-term assumptions, the most significant
accounts receivable exposures. of which are the health care cost trend rates, discount rates and
the expected return on plan assets. Differences between the
Foreign Currency Translation—The statements of earnings of for- expected long-term return on plan assets and the actual return
eign subsidiaries whose functional currencies are other than the are amortized over a five-year period. Actuarial losses and gains
U.S. dollar are translated into U.S. dollars using average exchange are amortized over the remaining service attribution periods of
rates for the period. The net assets of foreign subsidiaries whose the employees under the corridor method.
functional currencies are other than the U.S. dollar are translated
into U.S. dollars using exchange rates as of the balance sheet date. Fair Value Measurements—For assets and liabilities that are mea-
The U.S. dollar effects that arise from translating the net assets of sured using quoted prices in active markets, total fair value is the
these subsidiaries at changing rates are recorded in the foreign published market price per unit multiplied by the number of units
currency translation adjustment account, which is included in held without consideration of transaction costs. Assets and liabili-
equity as a component of Accumulated other comprehensive ties that are measured using significant other observable inputs are
income (loss). Transaction gains and losses are recorded on the valued by reference to similar assets or liabilities, adjusted for
Net foreign exchange (gain) loss line of the Consolidated contract restrictions and other terms specific to that asset or liabil-
Statement of Earnings. ity. For these items, a significant portion of fair value is derived by
reference to quoted prices of similar assets or liabilities in active
Revenue Recognition—Revenue from product sales is recognized markets. For all remaining assets and liabilities, fair value is derived
upon the transfer of control, which is generally upon shipment or using a fair value model, such as a discounted cash flow model or
delivery, depending on the delivery terms set forth in the customer Black-Scholes model. Purchased intangible assets are recorded at
contract. Provisions for discounts, rebates and sales incentives to fair value. The fair value of significant purchased intangible assets
customers, and returns and other adjustments are provided for is based on independent appraisals. Abbott uses a discounted cash
in the period the related sales are recorded. Sales incentives to flow model to value intangible assets. The discounted cash flow
customers are not material. Historical data is readily available model requires assumptions about the timing and amount of future
and reliable, and is used for estimating the amount of the reduc- net cash flows, risk, the cost of capital, terminal values and market
tion in gross sales. Revenue from the launch of a new product, participants. Intangible assets are reviewed for impairment on a
from an improved version of an existing product, or for shipments quarterly basis. Goodwill and indefinite-lived intangible assets are
in excess of a customer’s normal requirements are recorded when tested for impairment at least annually.
the conditions noted above are met. In those situations, manage-
ment records a returns reserve for such revenue, if necessary. Share-Based Compensation—The fair value of stock options and
In certain of Abbott’s businesses, primarily within diagnostics, restricted stock awards and units are amortized over their requi-
Abbott participates in selling arrangements that include multiple site service period, which could be shorter than the vesting period
performance obligations (e.g., instruments, reagents, procedures, if an employee is retirement eligible, with a charge to compensa-
and service agreements). The total transaction price of the con- tion expense.
tract is allocated to each performance obligation in an amount In March 2016, the Financial Accounting Standards Board (FASB)
based on the estimated relative standalone selling prices of the issued Accounting Standards Update (ASU) 2016-09, Improvements
promised goods or services underlying each performance obliga- to Employee Share-Based Payment Accounting. ASU 2016-09 modi-
tion. Sales of product rights for marketable products are recorded fies several aspects of the accounting for share-based payment
as revenue upon disposition of the rights. transactions, including the accounting for income taxes and classifi-
Income Taxes—Deferred income taxes are provided for the tax cation on the statement of cash flows. Abbott adopted the standard
effect of differences between the tax bases of assets and liabilities in the first quarter of 2017 and the following changes were made to
and their reported amounts in the financial statements at the the presentation of Abbott’s financial statements:
enacted statutory rate to be in effect when the taxes are paid. No • All excess tax benefits or tax deficiencies are now recognized as
additional income taxes have been provided for any remaining income tax benefit or expense as applicable. Previously, Abbott
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undistributed foreign earnings not subject to the transition tax recorded the benefits to Shareholders’ Investment. The tax
related to the U.S. Tax Cuts and Jobs Act, or any additional outside benefit recorded in Abbott’s Consolidated Statement of Earnings
basis differences that exist, as these amounts continue to be for 2018 and 2017 was $90 million and $120 million, respectively.
The standard did not permit retrospective presentation of this
benefit in prior years.
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• The tax benefit or deficiency is required to be classified as an Research and Development Costs—Internal research and develop-
operating activity in the statement of cash flows. Previously, it ment costs are expensed as incurred. Clinical trial costs incurred
was required to be classified within financing activities. Abbott by third parties are expensed as the contracted work is per-
has adopted this standard on a prospective basis and has not formed. Where contingent milestone payments are due to third
revised the classification of the excess tax benefit in the 2016 parties under research and development arrangements, the mile-
Consolidated Statement of Cash Flows. stone payment obligations are expensed when the milestone
results are achieved.
Litigation—Abbott accounts for litigation losses in accordance
with FASB ASC No. 450, “Contingencies.” Under ASC No. 450, Acquired In-Process and Collaborations Research and Development
loss contingency provisions are recorded for probable losses at (IPR&D)—The initial costs of rights to IPR&D projects obtained in
management’s best estimate of a loss, or when a best estimate an asset acquisition are expensed as IPR&D unless the project has
cannot be made, a minimum loss contingency amount is recorded. an alternative future use. These costs include initial payments
Legal fees are recorded as incurred. incurred prior to regulatory approval in connection with research
and development collaboration agreements that provide rights to
Cash, Cash Equivalents and Investments—Cash equivalents consist develop, manufacture, market and/or sell pharmaceutical prod-
of bank time deposits, U.S. government securities money market ucts. The fair value of IPR&D projects acquired in a business
funds and U.S. treasury bills with original maturities of three combination are capitalized and accounted for as indefinite-lived
months or less. Abbott holds certain investments with a carrying intangible assets until completed and are then amortized over the
value of approximately $325 million that are accounted for under remaining useful life. Collaborations are not significant.
the equity method of accounting. Investments held in a rabbi trust
and investments in publicly traded equity securities are recorded Concentration of Risk and Guarantees—Due to the nature of its
at fair value and changes in fair value are recorded in earnings. operations, Abbott is not subject to significant concentration risks
Investments in equity securities that are not traded on public stock relating to customers, products or geographic locations. Product
exchanges are recorded at cost minus impairment, if any, plus or warranties are not significant.
minus changes resulting from observable price changes in orderly Abbott has no material exposures to off-balance sheet arrange-
transactions for identical or similar investments of the same issuer. ments; no special purpose entities; nor activities that include
Investments in debt securities are classified as held-to-maturity, as non-exchange-traded contracts accounted for at fair value. Abbott
management has both the intent and ability to hold these securi- has periodically entered into agreements in the ordinary course of
ties to maturity, and are reported at cost, net of any unamortized business, such as assignment of product rights, with other compa-
premium or discount. Income relating to these securities is nies, which has resulted in Abbott becoming secondarily liable for
reported as interest income. obligations that Abbott was previously primarily liable. Since
Trade Receivable Valuations—Accounts receivable are stated at Abbott no longer maintains a business relationship with the other
their net realizable value. The allowance against gross trade parties, Abbott is unable to develop an estimate of the maximum
receivables reflects the best estimate of probable losses inherent potential amount of future payments, if any, under these obliga-
in the receivables portfolio determined on the basis of historical tions. Based upon past experience, the likelihood of payments
experience, specific allowances for known troubled accounts and under these agreements is remote. Abbott periodically acquires a
other currently available information. Accounts receivable are business or product rights in which Abbott agrees to pay contin-
charged off after all reasonable means to collect the full amount gent consideration based on attaining certain thresholds or based
(including litigation, where appropriate) have been exhausted. on the occurrence of certain events.
Inventories—Inventories are stated at the lower of cost (first-in, NOTE 2—NEW ACCOUNTING STANDARDS
first-out basis) or net realizable value. Cost includes material RECENTLY ADOPTED ACCOUNTING STANDARDS
and conversion costs.
In February 2018, the FASB issued ASU 2018-02, Reclassification of
Property and Equipment—Depreciation and amortization are Certain Tax Effects from Accumulated Other Comprehensive
provided on a straight-line basis over the estimated useful lives Income, which allows companies to reclassify stranded tax effects
of the assets. The following table shows estimated useful lives resulting from the 2017 Tax Cuts and Jobs Act, from accumulated
of property and equipment: other comprehensive income (loss) to retained earnings (Earnings
Classification Estimated Useful Lives
employed in the business). Abbott adopted the new standard at the
beginning of the fourth quarter of 2018. As a result of the adoption
Buildings 10 to 50 years (average 27 years)
of the new standard, approximately $337 million of stranded tax
Equipment 3 to 20 years (average 11 years)
effects were reclassified from Accumulated other comprehensive
income (loss) to Earnings employed in the business.
Product Liability—Abbott accrues for product liability claims
when it is probable that a liability has been incurred and the In August 2017, the FASB issued ASU 2017-12, Targeted Improvements
amount of the liability can be reasonably estimated based on to Accounting for Hedging Activities, which makes changes to the
existing information. The liabilities are adjusted quarterly as designation and measurement guidance for qualifying hedging
additional information becomes available. Receivables for insur- relationships and the presentation of hedge results. The standard
ance recoveries for product liability claims are recorded as assets, would have become effective for Abbott beginning in the first
on an undiscounted basis, when it is probable that a recovery will quarter of 2019, with early adoption permitted. Abbott elected to
be realized. Product liability losses are self-insured. early adopt ASU 2017-12 in the fourth quarter of 2018. The impact
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of adopting the standard is not significant to Abbott’s Consolidated the measurement of these investments are being recorded in Other
Balance Sheet and Consolidated Statement of Earnings. (income) expense, net within the Consolidated Statement of
In March 2017, the FASB issued ASU 2017-07, Compensation — Earnings. As part of the adoption, the cumulative-effect adjustment
Retirement Benefits (Topic 715): Improving the Presentation of Net to Earnings employed in the business in the Consolidated Balance
Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Sheet for net unrealized losses on equity investments that were
which changes the financial statement presentation requirements recorded in Accumulated other comprehensive income (loss) as of
for pension and other postretirement benefit expense. While December 31, 2017 was not significant.
service cost continues to be reported in the same financial state- In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts
ment line items as other current employee compensation costs, with Customers, which provides a single comprehensive model for
the ASU requires all other components of pension and other post- accounting for revenue from contracts with customers and super-
retirement benefit expense to be presented separately from service sedes nearly all previously existing revenue recognition guidance.
cost, and outside any subtotal of income from operations. The The core principle of the ASU is that an entity should recognize
standard was adopted by Abbott beginning in the first quarter of revenue when it transfers promised goods or services to customers
2018. The change in the presentation of the components of pen- in an amount that reflects the consideration to which the entity
sion cost per year was applied retrospectively. As a result, expects to be entitled in exchange for those goods or services. Abbott
approximately $160 million of net pension-related income per adopted the new standard as of January 1, 2018, using the modified
year was moved from the operating lines of the Consolidated retrospective approach method. Under this method, entities recog-
Statement of Earnings to non-operating income for 2017 and 2016. nize the cumulative effect of applying the new standard at the date
In November 2016, the FASB issued ASU 2016-18, Statement of of initial application with no restatement of comparative periods
Cash Flows: Restricted Cash, which requires that restricted cash presented. The cumulative effect of applying the new standard
be included with cash and cash equivalents when reconciling the resulted in an increase to Earnings employed in the business in the
beginning and end-of-period total amounts shown on the state- Consolidated Balance Sheet of $23 million which was recorded on
ment of cash flows. Abbott adopted this standard beginning in the January 1, 2018. The new standard has been applied only to those
first quarter of 2018, and applied the guidance retrospectively to contracts that were not completed as of January 1, 2018. The
all periods presented. Abbott did not have any restricted cash impact of adopting ASU 2014-09 was not significant to individual
balances in the periods presented except for $75 million of financial statement line items in the Consolidated Balance Sheet
restricted cash acquired as part of the Alere Inc. (Alere) acquisi- and Consolidated Statement of Earnings.
tion in October 2017. The restrictions on this cash were eliminated RECENT ACCOUNTING STANDARDS NOT YET ADOPTED
prior to the end of 2017.
In February 2016, the FASB issued ASU 2016-02, Leases, which
In October 2016, the FASB issued ASU 2016-16, Income Taxes requires lessees to recognize assets and liabilities for most leases on
(Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, the balance sheet. The standard becomes effective for Abbott begin-
which requires the recognition of the income tax effects of inter- ning in the first quarter of 2019. Abbott completed a detailed review
company sales and transfers of assets, other than inventory, in of its leases. Abbott will use the modified retrospective approach
the period in which the transfer occurs. Abbott adopted the stan- with the package of practical expedients which allows Abbott to
dard on January 1, 2018, using a modified retrospective approach carry forward the historical lease classification for leases existing at,
and recorded a cumulative catch-up adjustment to Earnings or entered into after the beginning of the period of adoption and to
employed in the business in the Consolidated Balance Sheet that account for lease and non-lease components as a single lease com-
was not significant. ponent for its lessee arrangements. Abbott does not expect the new
In August 2016, the FASB issued ASU 2016-15, Statement of Cash lease accounting standard to have a material impact on the amounts
Flows: Classification of Certain Cash Receipts and Cash Payments, reported in the Consolidated Statement of Earnings. As a result of
which clarifies how companies should present and classify certain adopting ASU 2016-02, Abbott expects to record approximately
cash receipts and cash payments in the statement of cash flows. $800 million to $900 million of right of use assets and lease liabili-
The ASU became effective for Abbott in the first quarter of 2018 ties for operating leases on the Consolidated Balance Sheet.
and did not have a material impact to the Company’s Consolidated
NOTE 3—REVENUE
Statement of Cash Flows.
In January 2016, the FASB issued ASU 2016-01, Financial Abbott’s revenues are derived primarily from the sale of a broad
Instruments – Recognition and Measurement of Financial Assets and line of health care products under short-term receivable arrange-
Financial Liabilities, which provides new guidance for the recogni- ments. Patent protection and licenses, technological and
tion, measurement, presentation, and disclosure of financial assets performance features, and inclusion of Abbott’s products under a
and liabilities. Abbott adopted the standard on January 1, 2018. contract most impact which products are sold; price controls,
Under the new standard, changes in the fair value of equity invest- competition and rebates most impact the net selling prices of
ments with readily determinable fair values are recorded in Other products; and foreign currency translation impacts the measure-
(income) expense, net within the Consolidated Statement of ment of net sales and costs. Abbott’s products are generally sold
Earnings. Previously, such fair value changes were recorded in directly to retailers, wholesalers, distributors, hospitals, health
other comprehensive income. Abbott has elected the measurement care facilities, laboratories, physicians’ offices and government
alternative allowed by ASU 2016-01 for its equity investments agencies throughout the world. Abbott has four reportable seg-
without readily determinable fair values. These investments are ments: Established Pharmaceutical Products, Diagnostic Products,
Nutritional Products, and Cardiovascular and Neuromodulation
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measured at cost, less any impairment, plus or minus any changes

resulting from observable price changes in orderly transactions for Products. Diabetes Care is a non-reportable segment and is
an identical or similar investment of the same issuer. Changes in included in Other in the following table.
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The following tables provide detail by sales category:
2018 2017
(in millions) U.S. Int’l Total U.S. Int’l Total
Established Pharmaceutical Products —
Key Emerging Markets $ ÷— $÷3,363 $÷3,363 $ — $÷3,307 $÷3,307
Other — 1,059 1,059 — 980 980
Total — 4,422 4,422 — 4,287 4,287
Nutritionals —
Pediatric Nutritionals 1,843 2,254 4,097 1,777 2,112 3,889
Adult Nutritionals 1,232 1,900 3,132 1,254 1,782 3,036
Total 3,075 4,154 7,229 3,031 3,894 6,925
Diagnostics —
Core Laboratory 985 3,401 4,386 921 3,142 4,063
Molecular 152 332 484 160 303 463
Point of Care 432 121 553 440 110 550
Rapid Diagnostics 1,148 924 2,072 296 244 540
Total 2,717 4,778 7,495 1,817 3,799 5,616
Cardiovascular and Neuromodulation —
Rhythm Management 1,019 1,072 2,091 1,030 1,073 2,103
Electrophysiology 764 904 1,668 609 773 1,382
Heart Failure 467 179 646 491 152 643
Vascular 1,126 1,803 2,929 1,180 1,712 2,892
Structural Heart 488 751 1,239 432 651 1,083
Neuromodulation 690 174 864 636 172 808
Total 4,554 4,883 9,437 4,378 4,533 8,911
Other 493 1,502 1,995 447 1,204 1,651
Total $10,839 $19,739 $30,578 $9,673 $17,717 $27,390
Abbott recognizes revenue from product sales upon the transfer gross sales when Abbott records its sale of the product. Settlement
of control, which is generally upon shipment or delivery, depend- of the rebate generally occurs from one to six months after sale.
ing on the delivery terms set forth in the customer contract. For Abbott regularly analyzes the historical rebate trends and makes
maintenance agreements that provide service beyond Abbott’s adjustments to reserves for changes in trends and terms of rebate
standard warranty and other service agreements, revenue is programs. Historically, adjustments to prior years’ rebate accruals
recognized ratably over the contract term. A time-based measure have not been material to net income.
of progress appropriately reflects the transfer of services to the Other allowances charged against gross sales include cash discounts
customer. Payment terms between Abbott and its customers vary and returns, which are not significant. Cash discounts are known
by the type of customer, country of sale, and the products or within 15 to 30 days of sale, and therefore can be reliably estimated.
services offered. The term between invoicing and the payment Returns can be reliably estimated because Abbott’s historical
due date is not significant. returns are low, and because sales return terms and other sales
Management exercises judgment in estimating variable consider- terms have remained relatively unchanged for several periods.
ation. Provisions for discounts, rebates and sales incentives to Product warranties are also not significant.
customers, and returns and other adjustments are provided for in Abbott also applies judgment in determining the timing of revenue
the period the related sales are recorded. Sales incentives to cus- recognition related to contracts that include multiple performance
tomers are not material. Historical data is readily available and obligations. The total transaction price of the contract is allocated to
reliable, and is used for estimating the amount of the reduction in each performance obligation in an amount based on the estimated
gross sales. Abbott provides rebates to government agencies, whole- relative standalone selling prices of the promised goods or services
salers, group purchasing organizations and other private entities. underlying each performance obligation. For goods or services for
Rebate amounts are usually based upon the volume of purchases which observable standalone selling prices are not available, Abbott
using contractual or statutory prices for a product. Factors used uses an expected cost plus a margin approach to estimate the stand-
in the rebate calculations include the identification of which alone selling price of each performance obligation.
products have been sold subject to a rebate, which customer or
government agency price terms apply, and the estimated lag time REMAINING PERFORMANCE OBLIGATIONS
between sale and payment of a rebate. Using historical trends, As of December 31, 2018, the estimated revenue expected to be
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adjusted for current changes, Abbott estimates the amount of the recognized in the future related to performance obligations that
rebate that will be paid, and records the liability as a reduction of are unsatisfied (or partially unsatisfied) was approximately
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$2.9 billion in the Diagnostic Products segment and approxi- NOTE 4—DISCONTINUED OPERATIONS AND ASSETS
mately $410 million in the Cardiovascular and Neuromodulation HELD FOR DISPOSITION
Products segment. Abbott expects to recognize revenue on On February 27, 2015, Abbott completed the sale of its developed
approximately 60 percent of these remaining performance markets branded generics pharmaceuticals business to Mylan Inc.
obligations over the next 24 months, approximately 16 percent (Mylan) for 110 million ordinary shares (or approximately
over the subsequent 12 months and the remainder thereafter. 22 percent) of a newly formed entity (Mylan N.V.) that combined
These performance obligations primarily reflect the future sale Mylan’s existing business and Abbott’s developed markets branded
of reagents/consumables in contracts with minimum purchase generics pharmaceuticals business.
obligations, extended warranty or service obligations related In April 2015, Abbott sold 40.25 million of the 110 million ordi-
to previously sold equipment, and remote monitoring services nary shares of Mylan N.V. received in the sale of the developed
related to previously implanted devices. Abbott has applied the markets branded generics pharmaceuticals business to Mylan.
practical expedient described in Accounting Standards In 2015, Abbott recorded a pretax gain of $207 million on
Codification (ASC) 606-10-50-14 and has not included remaining $2.29 billion in net proceeds from the sale of these shares. In 2017,
performance obligations related to contracts with original Abbott sold 69.75 million ordinary shares of Mylan N.V. and
expected durations of one year or less in the amounts above. received $2.704 billion in proceeds. Abbott recorded a $45 million
ASSETS RECOGNIZED FOR COSTS TO OBTAIN A CONTRACT gain from the sale of these ordinary shares in 2017, which was
recognized in the Other (income) expense, net line of the
WITH A CUSTOMER
Consolidated Statement of Earnings. Abbott no longer has an
Abbott has applied the practical expedient in ASC 340-40-25-4 ownership interest in Mylan N.V.
and records as an expense the incremental costs of obtaining
On February 10, 2015, Abbott completed the sale of its animal
contracts with customers in the period of occurrence when the
health business to Zoetis Inc. Abbott received cash proceeds of
amortization period of the asset that Abbott otherwise would
$230 million and reported an after tax gain on the sale of approxi-
have recognized is one year or less. Upfront commission fees paid
mately $130 million. In the first quarter of 2016, Abbott received
to sales personnel as a result of obtaining or renewing contracts
an additional $25 million of proceeds due to the expiration of a
with customers are incremental to obtaining the contract. Abbott
holdback agreement associated with the sale of this business and
capitalizes these amounts as contract costs. Capitalized commis-
reported an after-tax gain of $16 million.
sion fees are amortized based on the contract duration to which
the assets relate which ranges from two to ten years. The amounts As a result of the disposition of the above businesses, the operat-
as of December 31, 2018, were not significant. ing results of these businesses up to the date of sale are reported
as part of discontinued operations on the Earnings from
Additionally, the cost of transmitters provided to customers that use
Discontinued Operations, net of taxes line in the Consolidated
Abbott’s remote monitoring service with respect to certain medical
Statement of Earnings.
devices are capitalized as contract costs. Capitalized transmitter
costs are amortized based on the timing of the transfer of services On January 1, 2013, Abbott completed the separation of AbbVie
to which the assets relate, which typically ranges from eight to ten Inc. (AbbVie), which was formed to hold Abbott’s research-based
years. The amounts as of December 31, 2018, were not significant. proprietary pharmaceuticals business. Abbott has retained all
liabilities for all U.S. federal and foreign income taxes on income
OTHER CONTRACT ASSETS AND LIABILITIES prior to the separation, as well as certain non-income taxes attrib-
Abbott discloses Trade receivables separately in the Consolidated utable to AbbVie’s business. AbbVie generally will be liable for all
Balance Sheet at their net realizable value. Contract assets primar- other taxes attributable to its business.
ily relate to Abbott’s conditional right to consideration for work The net earnings of discontinued operations include income
completed but not billed at the reporting date. Contract assets at tax benefits of $39 million in 2018, $109 million in 2017 and
the beginning and end of the period, as well as the changes in the $325 million in 2016. These tax benefits primarily relate to the
balance, were not significant. resolution of various tax positions related to AbbVie’s operations
Contract liabilities primarily relate to payments received from for years prior to the separation.
customers in advance of performance under the contract. Abbott’s In September 2016, Abbott announced that it entered into a
contract liabilities arise primarily in the Cardiovascular and definitive agreement to sell Abbott Medical Optics (AMO), its
Neuromodulation reportable segment when payment is received vision care business, to Johnson & Johnson for $4.325 billion in
upfront for various multi-period extended service arrangements. cash, subject to customary purchase price adjustments for cash,
Changes in the contract liabilities during the period are as follows: debt and working capital. The decision to sell AMO reflected
Abbott’s proactive shaping of its portfolio in line with its strategic
(in millions) priorities. In February 2017, Abbott completed the sale of AMO to
Contract Liabilities Johnson & Johnson and recognized a pre-tax gain of $1.163 billion
Balance at January 1, 2018 $«198 including working capital adjustments, which was reported in the
Unearned revenue from cash received during the period 304 Other (income) expense, net line of the Consolidated Statement of
Revenue recognized that was included in contract liability Earnings in 2017. Abbott recorded an after-tax gain of $728 million
balance at beginning of period (243) in 2017 related to the sale of AMO. The operating results of AMO
Balance at December 31, 2018 $«259 up to the date of sale continued to be included in Earnings from
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continuing operations as the business did not qualify for reporting Abbott’s equity securities as of December 31, 2018 and December 31,
as discontinued operations. For 2017 and 2016, the AMO earnings 2017, include $307 million and $363 million, respectively, of invest-
(losses) before taxes included in Abbott’s consolidated earnings ments in mutual funds that are held in a rabbi trust acquired as
were $(18) million and $30 million, respectively. part of the St. Jude Medical, Inc. (St. Jude Medical) business
As discussed in Note 7—Business Acquisitions, in conjunction acquisition. These investments, which are specifically designated
with the acquisition of Alere, Abbott sold the Triage MeterPro as available for the purpose of paying benefits under a deferred
cardiovascular and toxicology business and the assets and liabili- compensation plan, are not available for general corporate pur-
ties related to its B-type Natriuretic Peptide assay business run on poses and are subject to creditor claims in the event of insolvency.
Beckman Coulter analyzers to Quidel Corporation (Quidel). The Abbott also holds certain investments as of December 31, 2018
legal transfer of certain assets related to these businesses did not with a carrying value of approximately $325 million that are
occur at the close of the sale to Quidel due to, among other factors, accounted for under the equity method of accounting and other
the time required to transfer marketing authorizations and other equity investments with a carrying value of $211 million that do
regulatory requirements in various countries. Under the terms of not have a readily determinable fair value. The $211 million carry-
the sale agreement with Abbott, Quidel is subject to the risks and ing value includes an unrealized gain of approximately $50 million
entitled to the benefits generated by these operations and assets. on an investment. The gain was recorded in the second quarter of
The assets presented as held for disposition in the Consolidated 2018 and relates to an observable price change for a similar invest-
Balance Sheet as of December 31, 2018 and 2017, primarily relate ment of the same issuer.
to the businesses sold to Quidel.
(in millions)
The following is a summary of the assets held for disposition as of December 31 2018 2017
December 31, 2018 and 2017:
Other Accrued Liabilities:
(in millions) Accrued rebates payable to government agencies $ «166 $ 124
December 31 2018 2017 Accrued other rebates (a) 608 498
Trade receivables, net $ 6 $÷12 All other 3,006 3,189
Total inventories 3 8 Total $3,780 $3,811
Current assets held for disposition 9 20
(a) Accrued wholesaler chargeback rebates of $197 million and $178 million at December 31, 2018
Net property and equipment — 56 and 2017, respectively, are netted in trade receivables because Abbott’s customers are invoiced
Intangible assets, net of amortization — 18 at a higher catalog price but only remit to Abbott their contract price for the products.
Goodwill 17 102
(in millions)
Non-current assets held for disposition 17 176
December 31 2018 2017
Total assets held for disposition $26 $196
Post-employment Obligations and Other Long-term
Liabilities:
NOTE 5—SUPPLEMENTAL FINANCIAL INFORMATION
Defined benefit pension plans and post-employment
Other (income) expense, net, for 2018, 2017 and 2016 includes medical and dental plans for significant plans $2,040 $2,169
approximately $160 million of income related to the non-service Deferred income taxes 2,056 2,006
cost components of the net periodic benefit costs associated with All other (b) 3,984 4,855
the pension and post-retirement medical plans. These amounts Total $8,080 $9,030
are being reported in other (income) expense as a result of the
adoption of the new accounting standard for recognizing pension (b) 2018 includes approximately $465 million of net unrecognized tax benefits, as well as
approximately $65 million of acquisition consideration payable. 2017 includes approxi-
cost. Other (income) expense, net, for 2017 includes a pre-tax gain mately $835 million of net unrecognized tax benefits, as well as approximately
of $1.163 billion related to the sale of AMO to Johnson & Johnson. $100 million of acquisition consideration payable.
See Note 4 — Discontinued Operations and Assets Held for
Disposition for further discussion of this sale. In 2017, Abbott Since January 2010, Venezuela has been designated as a highly
sold 69.75 million ordinary shares of Mylan N.V. and received inflationary economy under U.S. GAAP. On February 17, 2016, the
$2.704 billion in proceeds and recorded a $45 million pre-tax gain Venezuelan government announced that its three-tier exchange
related to the sale of these ordinary shares. Other (income) rate system would be reduced to two rates renamed the DIPRO
expense, net, for 2016 includes expense of $947 million to adjust and DICOM rates. The DIPRO was the official rate for food and
Abbott’s holding of Mylan N.V. ordinary shares due to a decline medicine imports and was adjusted from 6.3 to 10 bolivars per U.S.
in the fair value of the securities which was considered by dollar. The DICOM rate was a floating market rate published daily
Abbott to be other than temporary. by the Venezuelan central bank, which at the end of the first quar-
The detail of various balance sheet components is as follows: ter of 2016 was approximately 263 bolivars per U.S. dollar. As a
result of decreasing government approvals to convert bolivars to
(in millions) U.S. dollars to pay for intercompany accounts, as well as the accel-
December 31 2018 2017 erating deterioration of economic conditions in the country, Abbott
Long-term Investments:
concluded that it was appropriate to move to the DICOM rate at
the end of the first quarter of 2016. As a result, Abbott recorded a
Equity securities $856 $797
foreign currency exchange loss of $480 million in 2016 to revalue
Other
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41 86 its net monetary assets in Venezuela. After the revaluation, Abbott’s

Total $897 $883 investment in its Venezuelan operations was not significant.
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NOTE 6—ACCUMUL ATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of the changes in accumulated other comprehensive income (loss) from continuing operations, net of income taxes,
are as follows:
Cumulative Gains
Cumulative (Losses) on
Cumulative Net Actuarial Unrealized Derivative
Foreign Currency Losses and Prior Gains (Losses) on Instruments
Translation Service Costs Marketable Equity Designated as Cash
(in millions) Adjustments and Credits Securities Flow Hedges Total
Balance at December 31, 2016 $(4,959) $(2,284) $÷(69) $ 49 $(7,263)
Impact of business dispositions 142 6 — 1 149
Other comprehensive income (loss) before
reclassifications 1,365 (333) 182 (170) 1,044
(Income) loss amounts reclassified from accumulated
other comprehensive income (a) — 90 (118) 36 8
Net current period other comprehensive income (loss) 1,365 (243) 64 (134) 1,052
Balance at December 31, 2017 (3,452) (2,521) (5) (84) (6,062)
Impact of adoption of new accounting standards — (337) 5 — (332)
Other comprehensive income (loss) before
reclassifications (1,488) (18) — 58 (1,448)
(Income) loss amounts reclassified from accumulated
other comprehensive income (a) 28 150 — 78 256
Net current period other comprehensive income (loss) (1,460) 132 — 136 (1,192)
Balance at December 31, 2018 $(4,912) $(2,726) $ — $ 52 $(7,586)
(a) Reclassified amounts for foreign currency translation adjustments are recorded in the Consolidated Statement of Earnings as Net Foreign exchange (gain) loss; gains (losses) on marketable
equity securities are recorded as Other (income) expense and gains/losses related to cash flow hedges are recorded as Cost of products sold. Net actuarial losses and prior service cost is
included as a component of net periodic benefit cost – see Note 14 for additional information.
NOTE 7—BUSINESS ACQUISITIONS The final allocation of the fair value of the St. Jude Medical acqui-
On January 4, 2017, Abbott completed the acquisition of St. Jude sition is shown in the table below.
Medical, a global medical device manufacturer, for approximately
$23.6 billion, including approximately $13.6 billion in cash and (in billions)
approximately $10 billion in Abbott common shares, which repre- Acquired intangible assets, non-deductible $15.5
sented approximately 254 million shares of Abbott common stock, Goodwill, non-deductible 13.1
based on Abbott’s closing stock price on the acquisition date. As Acquired net tangible assets 3.0
part of the acquisition, approximately $5.9 billion of St. Jude Deferred income taxes recorded at acquisition (2.7)
Medical’s debt was assumed, repaid or refinanced by Abbott. The Net debt (5.3)
acquisition provides expanded opportunities for future growth Total final allocation of fair value $23.6
and is an important part of the company’s ongoing effort to
develop a strong, diverse portfolio of devices, diagnostics, nutri- The goodwill is primarily attributable to expected synergies
tionals and branded generic pharmaceuticals. The combined from combining operations, as well as intangible assets that do
business competes in nearly every area of the cardiovascular not qualify for separate recognition. The goodwill is identifiable
device market, as well as in the neuromodulation market. to the Cardiovascular and Neuromodulation Products reportable
Under the terms of the agreement, for each St. Jude Medical segment. The acquired tangible assets consist primarily of trade
common share, St. Jude Medical shareholders received $46.75 in accounts receivable of approximately $1.1 billion, inventory of
cash and 0.8708 of an Abbott common share. At an Abbott stock approximately $1.7 billion, other current assets of $176 million,
price of $39.36, which reflects the closing price on January 4, 2017, property and equipment of approximately $1.5 billion, and other
this represented a value of approximately $81 per St. Jude Medical long-term assets of approximately $455 million. The acquired
common share and total purchase consideration of $23.6 billion. tangible liabilities consist of trade accounts payable and other
The cash portion of the acquisition was funded through a combi- current liabilities of approximately $1.1 billion and other non-
nation of medium and long-term debt issued in November 2016 current liabilities of approximately $870 million.
and a $2.0 billion 120-day senior unsecured bridge term loan In 2016, Abbott and St. Jude Medical agreed to sell certain busi-
facility which was subsequently repaid. nesses to Terumo Corporation (Terumo) for approximately
$1.12 billion. The sale included the St. Jude Medical Angio-Seal™
and Femoseal™ vascular closure and Abbott’s Vado® Steerable
Sheath businesses. The sale closed on January 20, 2017 and no gain
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or loss was recorded in the Consolidated Statement of Earnings.

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On October 3, 2017, Abbott acquired Alere, a diagnostic device If the acquisitions of St. Jude Medical and Alere had occurred at
and service provider, for $51.00 per common share in cash, which the beginning of 2016, unaudited pro forma consolidated net sales
equated to a purchase price of approximately $4.5 billion. As part would have been approximately $28.9 billion and the unaudited
of the acquisition, Abbott tendered for Alere’s preferred shares for pro forma consolidated net loss from continuing operations would
a total value of approximately $0.7 billion. In addition, approxi- have been approximately $485 million in 2016. This includes
mately $3.0 billion of Alere’s debt was assumed and subsequently amortization of approximately $940 million of inventory step-up
repaid. The acquisition establishes Abbott as a leader in point of and $1.7 billion of intangibles related to St. Jude Medical and
care testing, expands Abbott’s global diagnostics presence and Alere. For 2017, unaudited pro forma consolidated net sales would
provides access to new products, channels and geographies. have been approximately $28.9 billion and unaudited pro forma
Abbott utilized a combination of cash on hand and debt to fund consolidated net earnings from continuing operations would have
the acquisition. See Note 11 — Debt and Lines of Credit for further been approximately $750 million, which includes $225 million of
details regarding the debt utilized for the acquisition. intangible amortization related to Alere. The unaudited pro forma
The final allocation of the fair value of the Alere acquisition is consolidated net earnings from continuing operations for 2017
shown in the table below. exclude inventory step-up amortization related to St. Jude Medical
and Alere of approximately $907 million which was recorded in
(in billions) 2017 but included in the 2016 unaudited pro forma results as noted
above. The unaudited pro forma information is not necessarily
Acquired intangible assets, non-deductible $«3.5
indicative of the consolidated results of operations that would
Goodwill, non-deductible 3.7
have been realized had the St. Jude Medical and Alere acquisitions
Acquired net tangible assets 1.0 been completed as of the beginning of 2016, nor is it meant to be
Deferred income taxes recorded at acquisition (0.4) indicative of future results of operations that the combined entity
Net debt (2.6) will experience.
Preferred stock (0.7) On July 17, 2017, Abbott commenced a tender offer to purchase
Total final allocation of fair value $«4.5 for cash the 1.77 million outstanding shares of Alere’s Series B
Convertible Perpetual Preferred Stock at a price of $402 per share,
The goodwill is primarily attributable to expected synergies
plus accrued but unpaid dividends to, but not including, the settle-
from combining operations, as well as intangible assets that do
ment date of the tender offer. This tender offer was subject to the
not qualify for separate recognition. The goodwill is identifiable
satisfaction of certain conditions, including Abbott’s acquisition
to the Diagnostic Products reportable segment. The approximate
of Alere and upon there being validly tendered (and not properly
value of the acquired tangible assets is $430 million of trade
withdrawn) at the expiration date of the tender offer that number
accounts receivable, $425 million of inventory, $225 million of
of shares of Preferred Stock that equaled at least a majority of the
other current assets, $540 million of property and equipment, and
Preferred Stock issued and outstanding at the expiration of the
$210 million of other long-term assets. The approximate value of
tender offer. The tender offer expired on October 3, 2017. All con-
the acquired tangible liabilities is $675 million of trade accounts
ditions to the offer were satisfied and Abbott accepted for payment
payable and other current liabilities and $145 million of other
the 1.748 million shares of Preferred Stock that were validly ten-
non-current liabilities.
dered (and not properly withdrawn). The remaining shares were
In the third quarter of 2017, Alere entered into agreements to sell cashed out for an amount equal to the $400.00 per share liquida-
its Triage MeterPro cardiovascular and toxicology business and tion preference of such shares, plus accrued but unpaid dividends,
the assets and liabilities related to its B-type Natriuretic Peptide without interest. Payment for all of the shares of Preferred Stock
assay business run on Beckman Coulter analyzers to Quidel. The was made in the fourth quarter of 2017.
transactions with Quidel reflect a total purchase price of
$400 million payable at the close of the transaction, $240 million NOTE 8—GOODWILL AND INTANGIBLE ASSETS
payable in six annual installments beginning approximately six The total amount of goodwill reported was $23.3 billion at
months after the close of the transaction, and contingent consider- December 31, 2018 and $24.0 billion at December 31, 2017. The
ation with a maximum value of $40 million. In the third quarter amounts reported at December 31, 2018 and 2017 exclude goodwill
of 2017, Alere entered into an agreement with Siemens Diagnostics reported in non-current assets held for disposition. In 2018, foreign
Holding II B.V. (Siemens) to sell its subsidiary, Epocal Inc., for currency translation adjustments decreased goodwill by approxi-
approximately $200 million payable at the close of the transaction. mately $440 million. Purchase price accounting adjustments
Alere agreed to divest these businesses in connection with the associated with the Alere acquisition decreased goodwill by
review by the Federal Trade Commission and the European $326 million in 2018. Goodwill increased by $17.2 billion in 2017
Commission of Abbott’s agreement to acquire Alere. The sale to due to the completion of the St. Jude Medical and Alere acquisi-
Quidel closed on October 6, 2017, and the sale to Siemens closed tions, partially offset by a decrease of $1.5 billion due to the sale of
on October 31, 2017. No gain or loss on these sales was recorded certain businesses to Terumo, Quidel and Siemens. Foreign cur-
in the Consolidated Statement of Earnings. rency translation increased goodwill by $653 million in 2017. The
In 2017, consolidated Abbott results include $6.5 billion of sales amount of goodwill related to reportable segments at December 31,
and a pre-tax loss of approximately $1.3 billion related to the 2018 was $3.0 billion for the Established Pharmaceutical Products
St. Jude Medical and Alere acquisitions, including approximately segment, $286 million for the Nutritional Products segment,
$1.5 billion of intangible amortization and $907 million of inven- $3.7 billion for the Diagnostic Products segment, and $15.3 billion
tory step-up amortization. The pre-tax loss excludes acquisition, for the Cardiovascular and Neuromodulation Products segment.
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integration and restructuring-related costs. In 2018 and 2017, there were no significant reductions of goodwill
relating to impairments.
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The gross amount of amortizable intangible assets, primarily pharmaceuticals and vascular businesses. Abbott recorded
product rights and technology was $25.7 billion and $25.6 billion employee related severance and other charges of approximately
as of December 31, 2018 and 2017, respectively, and accumulated $28 million in 2018, $120 million in 2017 and $32 million in 2016.
amortization was $10.4 billion and $8.1 billion as of December 31, Approximately $10 million in 2018, $7 million in 2017, and
2018 and 2017, respectively. In 2018, purchase price allocation $9 million in 2016 are recorded in Cost of products sold, approxi-
adjustments increased intangible assets by $280 million and mately $2 million in 2018, $77 million in 2017 and $5 million in
foreign currency translation adjustments decreased intangible 2016 are recorded in Research and development and approxi-
assets by $281 million. In 2017, the gross amount of amortizable mately $16 million in 2018, $36 million in 2017 and $18 million in
intangible assets increased by approximately $14.5 billion due to 2016 are recorded in Selling, general and administrative expense.
the completion of the St. Jude Medical and Alere acquisitions, Additional charges of approximately $2 million in 2017 and 2016
partially offset by a decrease of $210 million due to the sale of were recorded primarily for accelerated depreciation.
certain businesses to Quidel and Siemens. The following summarizes the activity for these restructurings:
Indefinite-lived intangible assets, which relate to in-process
research and development acquired in a business combination, (in millions)
were approximately $3.6 billion and $3.9 billion at December 31, Restructuring charges $÷32
2018 and 2017, respectively. The decrease in indefinite-lived intan- Payments and other adjustments (15)
gible assets in 2018 primarily relates to purchase price allocation Accrued balance at December 31, 2016 17
adjustments associated with the Alere acquisition. In 2017, Restructuring charges 120
in-process research and development increased by $4.5 billion Payments and other adjustments (18)
due to the completion of the St. Jude Medical and Alere acquisi-
Accrued balance at December 31, 2017 119
tions, a portion of which became amortizable during the year.
Restructuring charges 28
In 2017, Abbott also recorded a $53 million impairment of an
in-process research and development project related to the Payments and other adjustments (77)
Cardiovascular and Neuromodulation Products segment. Accrued balance at December 31, 2018 $÷70
The estimated annual amortization expense for intangible assets

NOTE 10 — INCENTIVE STOCK PROGRAM
recorded at December 31, 2018 is approximately $2.0 billion in
2019, $2.2 billion in 2020, $2.1 billion in 2021, $2.0 billion in 2022 The 2017 Incentive Stock Program authorizes the granting of
and $2.0 billion in 2023. Amortizable intangible assets are amor- nonqualified stock options, restricted stock awards, restricted
tized over 2 to 20 years (weighted average 12 years). stock units, performance awards, foreign benefits and other
share-based awards. Stock options and restricted stock awards
NOTE 9—RESTRUCTURING PL ANS and units comprise the majority of benefits that have been
In 2017 and 2018, Abbott management approved restructuring granted and are currently outstanding under this program and a
plans as part of the integration of the acquisitions of St. Jude prior program. In 2018, Abbott granted 5,760,221 stock options,
Medical into the Cardiovascular and Neuromodulation Products 871,331 restricted stock awards and 8,093,546 restricted stock
segment, and Alere into the Diagnostic Products segment, in units under this program.
order to leverage economies of scale and reduce costs. Abbott Under Abbott’s stock incentive programs, the purchase price of
recorded employee related severance and other charges of shares under option must be at least equal to the fair market value
approximately $52 million in 2018 and $187 million in 2017. of the common stock on the date of grant, and the maximum term
Approximately $5 million in 2018 and 2017 is recorded in Cost of of an option is 10 years. Options generally vest equally over three
products sold, approximately $10 million in 2018 is recorded in years. Restricted stock awards generally vest over 3 years, with no
Research and development, and approximately $37 million in 2018 more than one-third of the award vesting in any one year upon
and $182 million in 2017 are recorded in Selling, general and Abbott reaching a minimum return on equity target. Restricted
administrative expense. Abbott also assumed restructuring liabili- stock units vest over three years and upon vesting, the recipient
ties of approximately $23 million as part of the St Jude Medical receives one share of Abbott stock for each vested restricted stock
and Alere acquisitions. The following summarizes the activity unit. The aggregate fair market value of restricted stock awards
related to these actions and the status of the related accruals: and units is recognized as expense over the requisite service
period, which may be shorter than the vesting period if an
(in millions) employee is retirement eligible. Forfeitures are estimated at the
Liabilities assumed as part of business acquisitions $÷«23 time of grant. Restricted stock awards and settlement of vested
Restructuring charges 187 restricted stock units are issued out of treasury shares. Abbott
Payments and other adjustments (142) generally issues new shares for exercises of stock options. As a
Accrued balance at December 31, 2017 68 policy, Abbott does not purchase its shares relating to its share-
Restructuring charges 52 based programs.
Payments and other adjustments (79) In April 2017, Abbott’s shareholders authorized the 2017 Incentive
Accrued balance at December 31, 2018 $÷«41 Stock Program under which a maximum of 170 million shares
were available for issuance. At December 31, 2018, approximately
From 2016 to 2018, Abbott management approved plans to stream- 144 million shares remained available for future issuance.
line operations in order to reduce costs and improve efficiencies in
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various Abbott businesses including the nutritional, established

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In connection with the completion of the St. Jude Medical The number of restricted stock awards and units outstanding and
acquisition in the first quarter of 2017, unvested St. Jude Medical the weighted-average grant-date fair value at December 31, 2018
stock options and restricted stock units were assumed by Abbott and December 31, 2017 was 15,952,602 and $52.11 and 15,518,719
and converted into Abbott options and restricted stock units and $42.82, respectively. The number of restricted stock awards
(as applicable) of substantially equivalent value, in accordance and units, and the weighted-average grant-date fair value, that
with the merger agreement. The number of shares underlying were granted, vested and lapsed during 2018 were 8,964,877 and
the converted options was 7,364,571 at a weighted average $60.10, 7,522,375 and $42.85 and 1,008,619 and $49.27, respectively.
exercise price of $30.50. The number of restricted stock units The fair market value of restricted stock awards and units vested
converted was 2,324,500 at a weighted average grant date fair in 2018, 2017 and 2016 was $458 million, $348 million and
value of $37.69. $225 million, respectively.
Options Outstanding Exercisable Options

Weighted Weighted Weighted Weighted
Average Average Average Average
Exercise Remaining Exercise Remaining
Shares Price Life (Years) Shares Price Life (Years)
December 31, 2017 35,813,800 $36.85 5.8 22,216,890 $34.54 4.7
Granted 5,760,221 60.02
Exercised (7,690,569) 30.34
Lapsed (808,839) 44.77
December 31, 2018 33,074,613 $42.21 6.3 21,660,783 $38.05 5.3
The aggregate intrinsic value of options outstanding and exercis- NOTE 11—DEBT AND LINES OF CREDIT
able at December 31, 2018 were $996 million and $743 million, The following is a summary of long-term debt at December 31:
respectively. The total intrinsic value of options exercised in 2018,
2017 and 2016 was $249 million, $233 million and $98 million, (in millions) 2018 2017
respectively. The total unrecognized compensation cost related to 5.125% Notes, due 2019 $ ÷— $ 947
all share-based compensation plans at December 31, 2018 2.35% Notes, due 2019 — 2,850
amounted to approximately $364 million, which is expected to be 2.50% Line of credit borrowing due 2019 — 1,150
recognized over the next three years.
0.00% Notes, due 2020 1,300 —
Total non-cash stock compensation expense charged against 2.80% Notes, due 2020 500 500
income from continuing operations in 2018, 2017 and 2016 for 4.125% Notes, due 2020 — 597
share-based plans totaled approximately $477 million, $406 million
2.00% Notes, due 2020 — 750
and $310 million, respectively, and the tax benefit recognized was
2.90% Notes, due 2021 2,850 2,850
approximately $185 million, $242 million and $100 million, respec-
tively. The decrease in the tax benefit in 2018 primarily relates to 2.55% Notes, due 2022 750 750
the Tax Cuts and Jobs Act (TCJA), which reduces the U.S. federal 2.62% Term loan due 2022 — 2,800
corporate tax rate from 35% to 21%. The increase in the 2017 tax 0.875% Notes, due 2023 1,303 —
benefit primarily relates to the $120 million of tax benefit recorded 3.25% Notes, due 2023 — 900
in income after the adoption of ASU 2016-09. Stock compensation 3.40% Notes, due 2023 1,050 1,500
cost capitalized as part of inventory is not significant. 3.875% Notes, due 2025 500 500
The fair value of an option granted in 2018, 2017 and 2016 was 2.95% Notes, due 2025 1,000 1,000
$10.93, $6.54, and $4.38, respectively. The fair value of an option 1.50% Notes, due 2026 1,300 —
grant was estimated using the Black-Scholes option-pricing model 3.75% Notes, due 2026 1,700 3,000
with the following assumptions: 4.75% Notes, due 2036 1,650 1,650
2018 2017 2016 6.15% Notes, due 2037 547 547
Risk-free interest rate 2.7% 2.1% 1.4% 6.00% Notes, due 2039 515 515
Average life of options (years) 6.0 6.0 6.0 5.30% Notes, due 2040 694 694
Volatility 19.0% 18.0% 17.0% 4.75% Notes, due 2043 700 700
Dividend yield 1.9% 2.4% 2.7% 4.90% Notes, due 2046 3,250 3,250
Unamortized debt issuance costs (102) (119)
The risk-free interest rate is based on the rates available at the time Other, including fair value adjustments relating
of the grant for zero-coupon U.S. government issues with a remain- to interest rate hedge contracts designated as fair
ing term equal to the option’s expected life. The average life of an value hedges (148) (121)
option is based on both historical and projected exercise and lapsing Total, net of current maturities 19,359 27,210
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data. Expected volatility is based on implied volatilities from traded Current maturities of long-term debt 7 508
options on Abbott’s stock and historical volatility of Abbott’s stock
Total carrying amount $19,366 $27,718
over the expected life of the option. Dividend yield is based on the
option’s exercise price and annual dividend rate at the time of grant.
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On February 16, 2018, the board of directors authorized the early exchanged certain St. Jude Medical debt obligations with an
redemption of up to $5 billion of outstanding long-term notes. aggregate principal amount of approximately $2.9 billion for debt
Redemptions under this authorization include the following: issued by Abbott which consists of:
• $0.947 billion principal amount of its 5.125% Notes due 2019— Principal Amount
redeemed on March 22, 2018
2.00% Senior Notes due 2018 $473.8 million
• $1.055 billion of the $2.850 billion principal amount of its 2.80% Senior Notes due 2020 $483.7 million
2.35% Notes due 2019—redeemed on March 22, 2018 3.25% Senior Notes due 2023 $818.4 million
• $1.300 billion of the $1.795 billion outstanding principal amount 3.875% Senior Notes due 2025 $490.7 million
of its 2.35% Notes due 2019—redeemed on June 22, 2018 4.75% Senior Notes due 2043 $639.1 million
• $0.495 billion outstanding principal amount of its 2.35% Notes Following this exchange, approximately $194.2 million of existing
due 2019—redeemed on September 28, 2018 St. Jude Medical notes remained outstanding across the five series
On January 25, 2019, Abbott gave notice to the holders of its of existing notes which have the same coupons and maturities as
2.80% Notes due 2020, that it will redeem the $500 million out- those listed above. There were no significant costs associated with
standing principal amount of these notes on February 24, 2019. the exchange of debt. In addition, during the first quarter of 2017,
After the redemption of the 2.80% Notes, approximately Abbott assumed and subsequently repaid approximately
$700 million of the $5 billion debt redemption authorization $2.8 billion of various St. Jude Medical debt obligations.
noted above will remain available. On January 4, 2017, as part of funding the cash portion of the
Abbott incurred a net charge of $14 million related to the St. Jude Medical acquisition, Abbott borrowed $2.0 billion under
March 22, 2018 early repayment of debt. a 120-day senior unsecured bridge term loan facility. This facility
was repaid during the first quarter of 2017.
On September 17, 2018, Abbott repaid upon maturity the
$500 million aggregate principal amount outstanding of the In 2017, Abbott issued 364-day yen-denominated debt, of which
2.00% Senior Notes due 2018. $199 million and $195 million was outstanding at December 31,
2018 and 2017, respectively. In 2017, Abbott also paid off a
On September 27, 2018, Abbott’s wholly owned subsidiary, $479 million yen-denominated short-term borrowing during
Abbott Ireland Financing DAC, completed a euro debt offering the year.
of €3.420 billion of long-term debt consisting of €1.140 billion of
non-interest bearing Senior Notes due 2020 at 99.727% of par On July 31, 2017, Abbott entered into a 5-year term loan agreement
value; €1.140 billion of 0.875% Senior Notes due 2023 at 99.912% that allowed Abbott to borrow up to $2.8 billion on an unsecured
of par value; and €1.140 billion of 1.50% Senior Notes due 2026 at basis for the acquisition of Alere. On October 3, 2017, Abbott bor-
99.723% of par value. The proceeds equated to approximately rowed $2.8 billion under this term loan agreement to finance the
$4 billion. The notes are guaranteed by Abbott. acquisition of Alere, to repay certain indebtedness of Abbott and
Alere, and to pay fees and expenses in connection with the acqui-
On October 28, 2018, Abbott redeemed approximately $4 billion sition. Borrowings under the term loan bore interest based on a
of debt, which included $750 million principal amount of its 2.00% Eurodollar rate, plus an applicable margin based on Abbott’s credit
Notes due 2020; $597 million principal amount of its 4.125% Notes ratings. Abbott paid off this term loan on January 5, 2018.
due 2020; $900 million principal amount of its 3.25% Notes due
2023; $450 million principal amount of its 3.4% Notes due 2023; On October 3, 2017 Abbott borrowed $1.7 billion under its lines
and $1.300 billion principal amount of its 3.75% Notes due 2026. of credit. Proceeds from such borrowing were used to finance the
These amounts are in addition to the $5 billion authorization acquisition of Alere, to repay certain indebtedness of Abbott and
discussed above. In conjunction with the redemption, Abbott Alere, and to pay fees and expenses in connection with the acqui-
unwound approximately $1.1 billion in interest rate swaps relating sition. These lines of credit were part of a 2014 revolving credit
to the 3.40% Note due in 2023 and the 3.75% Note due in 2026. agreement that provided Abbott with the ability to borrow up to
Abbott incurred a net charge of $153 million related to the early $5 billion on an unsecured basis. Advances under the revolving
repayment of this debt and the unwinding of related interest credit agreement, including the $1.7 billion borrowing in October
rate swaps. 2017, were scheduled to mature and be payable on July 10, 2019.
The $1.7 billion borrowing bore interest based on a Eurodollar
On November 30, 2018, Abbott entered into a Five Year Credit rate, plus an applicable margin based on Abbott’s credit ratings.
Agreement (Revolving Credit Agreement) and terminated the Prior to October 3, 2017, no amounts were previously drawn under
2014 revolving credit agreement. There were no outstanding the revolving credit agreement. In the fourth quarter of 2017,
borrowings under the 2014 revolving credit agreement at the Abbott paid off $550 million on the revolving loan. Abbott paid off
time of its termination. The Revolving Credit Agreement provides the remaining balance on this revolving loan on January 5, 2018.
Abbott with the ability to borrow up to $5 billion on an unsecured
basis. Any borrowings under the Revolving Credit Agreement In the fourth quarter of 2017, in conjunction with the acquisition
will mature and be payable on November 30, 2023. Any borrow- of Alere, Abbott assumed and subsequently repaid $3.0 billion of
ings under the Revolving Credit Agreement will bear interest, at Alere’s debt.
Abbott’s option, based on either a base rate or Eurodollar rate, In November 2016, Abbott issued $15.1 billion of medium and
plus an applicable margin based on Abbott’s credit ratings. long-term debt to primarily fund the cash portion of the acquisi-
tion of St. Jude Medical. Abbott issued $2.85 billion of 2.35%
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In the first quarter of 2017, as part of the acquisition of St. Jude

Medical, Abbott’s long-term debt increased due to the assumption Senior Notes due November 22, 2019; $2.85 billion of 2.90% Senior
of outstanding debt previously issued by St. Jude Medical. Abbott Notes due November 30, 2021; $1.50 billion of 3.40% Senior Notes
due November 30, 2023; $3.00 billion of 3.75% Senior Notes due
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November 30, 2026; $1.65 billion of 4.75% Senior Notes due loans and trade accounts payable where the receivable or payable
November 30, 2036; and $3.25 billion of 4.90% Senior Notes due is denominated in a currency other than the functional currency
November 30, 2046. In November 2016, Abbott also entered into of the entity. For intercompany loans, the contracts require Abbott
interest rate swap contracts totaling $3.0 billion related to the to sell or buy foreign currencies, primarily European currencies,
new debt, which have the effect of changing Abbott’s obligation in exchange for primarily U.S. dollars and European currencies.
from a fixed interest rate to a variable interest rate obligation For intercompany and trade payables and receivables, the currency
on the related debt instruments. exposures are primarily the U.S. dollar and European currencies.
In February 2016, Abbott obtained a commitment for a 364-day At December 31, 2018, 2017 and 2016, Abbott held gross notional
senior unsecured bridge term loan facility for an amount not to amounts of $13.6 billion, $20.1 billion and $14.9 billion, respectively,
exceed $9 billion in conjunction with its pending acquisition of of such foreign currency forward exchange contracts.
Alere. This commitment, which was automatically extended for In March 2017, Abbott repaid its $479 million foreign denominated
up to 90 days on January 29, 2017, expired on April 30, 2017 and short-term debt which was designated as a hedge of the net invest-
was not renewed since Abbott did not need this bridge facility ment in a foreign subsidiary. At December 31, 2016, the value of
to finance the Alere acquisition. The fees associated with the this short-term debt was $454 million and changes in the fair
bridge facilities were recognized in interest expense. value of the debt up through the date of repayment due to changes
Principal payments required on long-term debt outstanding at in exchange rates were recorded in Accumulated other compre-
December 31, 2018 are $7 million in 2019, $1.8 billion in 2020, hensive income (loss), net of tax.
$2.9 billion in 2021, $750 million in 2022, $2.3 billion in 2023 and Abbott is a party to interest rate hedge contracts totaling approxi-
$11.8 billion in 2024 and thereafter. mately $2.9 billion at December 31, 2018, $4.0 billion at
At December 31, 2018, Abbott’s long-term debt rating was BBB by December 31, 2017 and $5.5 billion at December 31, 2016, to manage
Standard & Poor’s Corporation and Baa1 by Moody’s. Abbott has its exposure to changes in the fair value of fixed-rate debt. These
readily available financial resources, including lines of credit of contracts are designated as fair value hedges of the variability of
$5.0 billion which expire in 2023 and support commercial paper the fair value of fixed-rate debt due to changes in the long-term
borrowing arrangements. Abbott’s weighted-average interest rate benchmark interest rates. The effect of the hedge is to change a
on short-term borrowings was 0.4% at December 31, 2018, 0.3% fixed-rate interest obligation to a variable rate for that portion of
at December 31, 2017 and 0.6% at December 31, 2016. the debt. Abbott records the contracts at fair value and adjusts the
carrying amount of the fixed-rate debt by an offsetting amount.
NOTE 12—FINANCIAL INSTRUMENTS, DERIVATIVES AND In October 2018, Abbott unwound approximately $1.1 billion in
FAIR VALUE MEASURES interest rate swaps relating to the 3.40% Note due in 2023 and the
Certain Abbott foreign subsidiaries enter into foreign currency 3.75% Note due in 2026. As a part of the unwinding, Abbott paid
forward exchange contracts to manage exposures to changes in approximately $90 million in cash, which was included in the
foreign exchange rates for anticipated intercompany purchases Financing Activities section of the Consolidated Statement of
by those subsidiaries whose functional currencies are not the U.S. Cash Flows in 2018.
dollar. These contracts, with gross notional amounts totaling In the second quarter of 2017, Abbott unwound approximately
$5.1 billion at December 31, 2018, and $3.3 billion at December 31, $1.5 billion in interest rate swaps relating to the 2.00% Note due
2017, are designated as cash flow hedges of the variability of the cash in 2020 and the 2.55% Note due in 2022. The proceeds received
flows due to changes in foreign exchange rates and are recorded at were not significant.
fair value. Accumulated gains and losses as of December 31, 2018
will be included in Cost of products sold at the time the products In December 2016, Abbott unwound approximately $1.5 billion
are sold, generally through the next twelve to eighteen months. in interest rate swaps relating to the 4.125% Note due in 2020 and
the 5.125% Note due in 2019. As part of the unwinding, Abbott
Abbott enters into foreign currency forward exchange contracts to received approximately $55 million in cash, which was included
manage currency exposures for foreign currency denominated in the Financing Activities section of the Consolidated Statement
third-party trade payables and receivables, and for intercompany of Cash Flows in 2016.
The following table summarizes the amounts and location of certain derivative financial instruments as of December 31:
Fair Value—Assets Fair Value—Liabilities

(in millions) 2018 2017 Balance Sheet Caption 2018 2017 Balance Sheet Caption
Post-employment
Deferred income taxes obligations and other
Interest rate swaps designated as fair value hedges $÷«— $÷«— and other assets $100 $÷93 long-term liabilities
Foreign currency forward exchange contracts —
Other prepaid expenses
Hedging instruments 81 21 and receivables 44 106 Other accrued liabilities
Other prepaid expenses
Others not designated as hedges 33 117 and receivables 51 99 Other accrued liabilities
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$114 $138 $195 $298

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The following table summarizes the activity for foreign currency certain other derivative financial instruments, as well as the
forward exchange contracts designated as cash flow hedges, debt amounts and location of income (expense) and gain (loss) reclassi-
designated as a hedge of net investment in a foreign subsidiary and fied into income.
Gain (loss) Recognized in Other Income (expense) and Gain (loss)

Comprehensive Income (loss) Reclassified into Income
(in millions) 2018 2017 2016 2018 2017 2016 Income Statement Caption
Foreign currency forward exchange contracts
designated as cash flow hedges $73 $(226) $«49 $(114) $(48) $÷«48 Cost of products sold
Debt designated as a hedge of net investment in a
foreign subsidiary — (25) (15) n/a n/a n/a n/a
Interest rate swaps designated as fair value hedges n/a n/a n/a (97) (24) (127) Interest expense
Losses of $100 million and $64 million, and gains of $8 million marked to market, offsetting the effect of marking the interest
were recognized in 2018, 2017 and 2016, respectively, related to rate swaps to market.
foreign currency forward exchange contracts not designated as The carrying values and fair values of certain financial instruments
hedges. These amounts are reported in the Consolidated as of December 31 are shown in the table below. The carrying values
Statement of Earnings on the Net foreign exchange (gain) loss line. of all other financial instruments approximate their estimated fair
The interest rate swaps are designated as fair value hedges of the values. The counterparties to financial instruments consist of
variability of the fair value of fixed-rate debt due to changes in select major international financial institutions. Abbott does not
the long-term benchmark interest rates. The hedged debt is expect any losses from nonperformance by these counterparties.
2018 2017
(in millions) Carrying Value Fair Value Carrying Value Fair Value
Long-term Investment Securities:
Equity securities $ ÷ 856 $ ÷ 856 $ ÷ 797 $ ÷ 797
Other 41 41 86 86
Total Long-term Debt (19,366) (19,871) (27,718) (29,018)
Foreign Currency Forward Exchange Contracts:
Receivable position 114 114 138 138
(Payable) position (95) (95) (205) (205)
Interest Rate Hedge Contracts:
(Payable) position (100) (100) (93) (93)
The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the balance sheet:
Basis of Fair Value Measurement
Significant Other Significant
Outstanding Quoted Prices in Observable Unobservable
( in millions) Balances Active Markets Inputs Inputs
December 31, 2018:
Equity securities $ «320 $320 $ — $÷«—
Foreign currency forward exchange contracts 114 — 114 —
Total Assets $ «434 $320 $ «114 $÷«—
Fair value of hedged long-term debt $2,743 $ «— $2,743 $÷«—
Interest rate swap financial instruments 100 — 100 —
Contingent consideration related to business combinations 71 — — 71
Total Liabilities $3,009 $ «— $2,938 $ 71
December 31, 2017:
Equity securities $ «374 $374 $ — $«÷—
Total Assets $ «512 $374 $ «138 $«÷—
Fair value of hedged long-term debt $3,898 $ «— $3,898 $«÷—
Interest rate swap financial instruments
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93 — 93 —
Contingent consideration related to business combinations 120 — — 120
Total Liabilities $4,316 $ «— $4,196 $120
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The fair value of foreign currency forward exchange contracts is cleanup cost for each site for which management believes Abbott
determined using a market approach, which utilizes values for has a probable loss exposure. No individual site cleanup exposure
comparable derivative instruments. The fair value of the debt was is expected to exceed $4 million, and the aggregate cleanup expo-
determined based on the face value of the debt adjusted for the sure is not expected to exceed $10 million.
fair value of the interest rate swaps, which is based on a dis- Abbott is involved in various claims and legal proceedings, and
counted cash flow analysis using significant other Abbott estimates the range of possible loss for its legal proceed-
observable inputs. ings and environmental exposures to be from approximately
Contingent consideration relates to businesses acquired by Abbott. $125 million to $165 million. The recorded accrual balance at
The fair value of the contingent consideration was determined December 31, 2018 for these proceedings and exposures was
based on independent appraisals, at the time of the business acqui- approximately $145 million. This accrual represents manage-
sition, adjusted for the time value of money and other changes in ment’s best estimate of probable loss, as defined by FASB ASC
fair value. The maximum amount for certain contingent consider- No. 450, “Contingencies.” Within the next year, legal proceedings
ation is not determinable as it is based on a percent of certain may occur that may result in a change in the estimated loss
sales. Excluding such contingent consideration, the maximum accrued by Abbott. While it is not feasible to predict the outcome
amount estimated to be due is approximately $480 million, which of all such proceedings and exposures with certainty, manage-
is dependent upon attaining certain sales thresholds or based on ment believes that their ultimate disposition should not have a
the occurrence of certain events, such as regulatory approvals. material adverse effect on Abbott’s financial position, cash flows,
or results of operations.
NOTE 13—LITIGATION AND ENVIRONMENTAL MATTERS
NOTE 14—POST-EMPLOYMENT BENEFITS
Abbott has been identified as a potentially responsible party for
investigation and cleanup costs at a number of locations in the Retirement plans consist of defined benefit, defined contribution
United States and Puerto Rico under federal and state remediation and medical and dental plans. Information for Abbott’s major
laws and is investigating potential contamination at a number of defined benefit plans and post-employment medical and dental
company-owned locations. Abbott has recorded an estimated benefit plans is as follows:
Defined Benefit Plans Medical and Dental Plans

(in millions) 2018 2017 2018 2017
Projected benefit obligations, January 1 $ 9,953 $ 8,517 $1,393 $1,274
Service cost — benefits earned during the year 293 283 26 25
Interest cost on projected benefit obligations 308 287 48 45
(Gains) losses, primarily changes in discount rates, plan design changes, law changes
and differences between actual and estimated health care costs (1,044) 752 (106) 149
Benefits paid (295) (276) (68) (80)
Other, including foreign currency translation (122) 390 (1) (20)
Projected benefit obligations, December 31 $ 9,093 $ 9,953 $1,292 $1,393
Plan assets at fair value, January 1 $«9,298 $«7,542 $ 419 $ 416
Actual return (loss) on plans’ assets (450) 1,107 (20) 65
Company contributions 114 645 12 12
Benefits paid (295) (276) (60) (74)
Other, including foreign currency translation (114) 280 — —
Plan assets at fair value, December 31 $«8,553 $«9,298 $ 351 $ 419
Projected benefit obligations greater than plan assets, December 31 $ (540) $ (655) $÷(941) $÷(974)
Long-term assets $ ÷583 $ ÷563 $ ÷— $ ÷—
Short-term liabilities (23) (21) (1) (2)
Long-term liabilities (1,100) (1,197) (940) (972)
Net liability $ (540) $ (655) $÷(941) $÷(974)
Amounts Recognized in Accumulated Other Comprehensive Income (loss):
Actuarial losses, net $«3,326 $«3,466 $ 361 $ 456
Prior service cost (credits) (2) (9) (163) (208)
Total $«3,324 $«3,457 $ 198 $ 248
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The projected benefit obligations for non-U.S. defined benefit accumulated benefit obligations, the projected benefit obligations
plans was $2.7 billion and $3.0 billion at December 31, 2018 and and the aggregate plan assets were as follows:
2017, respectively. The accumulated benefit obligations for all
defined benefit plans were $8.3 billion and $8.9 billion at (in millions) 2018 2017
December 31, 2018 and 2017, respectively. Accumulated benefit obligation $1,265 $1,664
Projected benefit obligation 1,362 1,892
For plans where the accumulated benefit obligations exceeded
plan assets at December 31, 2018 and 2017, the aggregate Fair value of plan assets 375 696
The components of the net periodic benefit cost were as follows:
Defined Benefit Plans Medical and Dental Plans

(in millions) 2018 2017 2016 2018 2017 2016
Service cost — benefits earned during the year $«293 $«283 $«263 $«26 $«25 $«26
Interest cost on projected benefit obligations 308 287 288 48 45 43
Expected return on plans’ assets (680) (613) (565) (33) (33) (35)
Amortization of actuarial losses 205 163 129 33 23 16
Amortization of prior service cost (credits) 1 1 — (45) (45) (45)
Total cost $«127 $«121 $«115 $«29 $«15 $÷«5
In 2017, Abbott recognized a $10 million curtailment gain related The weighted average assumptions used to determine the net cost
to the sale of AMO. for defined benefit plans and medical and dental plans are as follows:
Other comprehensive income (loss) for each respective year 2018 2017 2016
includes the amortization of actuarial losses and prior service
Discount rate 3.4% 3.9% 4.3%
costs (credits) as noted in the previous table. Other comprehensive
Expected return on plan assets 7.7% 7.6% 7.6%
income (loss) for each respective year also includes: net actuarial
losses of $86 million for defined benefit plans and a gain of Expected aggregate average long-
$53 million for medical and dental plans in 2018; net actuarial term change in compensation 4.4% 4.3% 4.3%
losses of $247 million for defined benefit plans and $97 million The assumed health care cost trend rates for medical and dental
for medical and dental plans in 2017; net actuarial losses of plans at December 31 were as follows:
$571 million for defined benefit plans and $20 million for medical
and dental plans in 2016. 2018 2017 2016
The pretax amount of actuarial losses and prior service cost Health care cost trend rate assumed
(credits) included in Accumulated other comprehensive income for the next year 9% 9% 8%
(loss) at December 31, 2018 that is expected to be recognized in Rate that the cost trend rate
the net periodic benefit cost in 2019 is $130 million and $1 million gradually declines to 5% 5% 5%
of expense, respectively, for defined benefit pension plans and Year that rate reaches the assumed
$24 million of expense and $32 million of income, respectively, ultimate rate 2025 2027 2027
for medical and dental plans. The discount rates used to measure liabilities were determined
The weighted average assumptions used to determine benefit based on high-quality fixed income securities that match the
obligations for defined benefit plans and medical and dental plans duration of the expected retiree benefits. The health care cost
are as follows: trend rates represent Abbott’s expected annual rates of change in
the cost of health care benefits and are forward projections of
2018 2017 2016 health care costs as of the measurement date. A one-percentage
Discount rate 4.0% 3.4% 3.9% point increase/(decrease) in the assumed health care cost trend
Expected aggregate average long- rate would increase/(decrease) the accumulated post-employment
term change in compensation 4.3% 4.4% 4.3% benefit obligations as of December 31, 2018, by $157 million
/$(131) million, and the total of the service and interest cost com-
ponents of net post-employment health care cost for the year then
ended by approximately $12 million/$(10) million.
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The following table summarizes the basis used to measure the defined benefit and medical and dental plan assets at fair value:
Basis of Fair Value Measurement

Quoted Significant Significant
Outstanding Prices in Other Observable Unobservable Measured
(in millions) Balances Active Markets Inputs Inputs at NAV (k)
December 31, 2018:
Equities:
U.S. large cap (a) $2,168 $1,319 $ ÷ 5 $— $ «844
U.S. mid and small cap (b) 515 226 — — 289
International (c) 1,671 370 — — 1,301
Fixed income securities:
U.S. government securities (d) 476 51 269 — 156
Corporate debt instruments (e) 1,150 269 701 — 180
Non-U.S. government securities (f ) 405 5 — — 400
Other (g) 199 15 55 — 129
Absolute return funds (h) 1,684 448 — — 1,236
Commodities (i) 59 — — 4 55
Cash and Cash Equivalents 192 123 — — 69
Other ( j) 385 11 — — 374
$8,904 $2,837 $1,030 $4 $5,033
December 31, 2017:
Equities:
U.S. large cap (a) $2,506 $1,600 $ — $— $ 906
U.S. mid and small cap (b) 670 243 — — 427
International (c) 1,937 448 — — 1,489
Fixed income securities:
U.S. government securities (d) 510 11 286 — 213
Corporate debt instruments (e) 930 107 411 — 412
Non-U.S. government securities (f ) 625 222 — — 403
Other (g) 216 93 27 — 96
Absolute return funds (h) 1,814 135 — — 1,679
Commodities (i) 60 — — 4 56
Cash and Cash Equivalents 178 12 — — 166
Other ( j) 271 7 — — 264
$9,717 $2,878 $ «724 $4 $6,111
(a) A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices.
(b) A mix of index funds and actively managed equity accounts that are benchmarked to various mid and small cap indices.
(c) A mix of index funds and actively managed pooled investment funds that are benchmarked to various non-U.S. equity indices in both developed and emerging markets.
(d) A mix of index funds and actively managed accounts that are benchmarked to various U.S. government bond indices.
(e) A mix of index funds and actively managed accounts that are benchmarked to various corporate bond indices.
(f ) Primarily United Kingdom, Japan and Irish government-issued bonds. In 2017, included Netherlands bonds.
(g) Primarily asset backed securities and an actively managed, diversified fixed income vehicle benchmarked to the one-month Libor / Euribor.
(h) Primarily funds invested by managers that have a global mandate with the flexibility to allocate capital broadly across a wide range of asset classes and strategies including, but not limited to
equities, fixed income, commodities, interest rate futures, currencies and other securities to outperform an agreed upon benchmark with specific return and volatility targets.
(i) Primarily investments in liquid commodity future contracts and private energy funds.
( j) Primarily investments in private funds, such as private equity, private credit and private real estate.
(k) In accordance with ASU 2015-07, investments measured at fair value using the NAV practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in
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Equities that are valued using quoted prices are valued at the Abbott funds its domestic pension plans according to IRS funding
published market prices. Equities in a common collective trust or limitations. International pension plans are funded according to
a registered investment company that are valued using significant similar regulations. Abbott funded $114 million in 2018 and
other observable inputs are valued at the net asset value (NAV) $645 million in 2017 to defined pension plans. Abbott expects to
provided by the fund administrator. The NAV is based on the value contribute approximately $380 million to its pension plans in 2019.
of the underlying assets owned by the fund minus its liabilities. Total benefit payments expected to be paid to participants, which
For approximately half of these funds, investments may be includes payments funded from company assets, as well as paid
redeemed once per month, with a required 7 to 30 day notice from the plans, are as follows:
period. For the remaining funds, daily redemption of an invest-
ment is allowed. Fixed income securities that are valued using Defined Medical and
significant other observable inputs are valued at prices obtained (in millions) Benefit Plans Dental Plans
from independent financial service industry recognized vendors. 2019 $ «306 $ 74
Abbott did not have any unfunded commitments related to fixed 2020 317 77
income funds at December 31, 2018 and 2017. For the majority of
2021 333 78
these funds, investments may be redeemed either weekly or
2022 351 79
monthly, with a required 2 to 14 day notice period. For the remain-
ing funds, investments may be generally redeemed daily. 2023 369 80
2024 to 2028 2,160 418
Absolute return funds and commodities are valued at the NAV
provided by the fund administrator. All private funds are valued The Abbott Stock Retirement Plan is the principal defined contribu-
at the NAV provided by the fund on a one-quarter lag adjusted for tion plan. Abbott’s contributions to this plan were $146 million in
known cash flows and significant events through the reporting 2018, $79 million in 2017 and $83 million in 2016. The 2018 contri-
date. Abbott did not have any unfunded commitments related to butions include amounts related to participants of the St. Jude
absolute return funds at December 31, 2018 and 2017. Investments Medical Retirement Plan which was terminated in January 2018.
in these funds may be generally redeemed monthly or quarterly
with required notice periods ranging from 5 to 45 days. For NOTE 15—TAXES ON EARNINGS FROM CONTINUING
approximately $100 million of the absolute return funds, redemp- OPERATIONS
tions are subject to a 25 percent gate. For commodities, Taxes on earnings from continuing operations reflect the annual
investments in the private energy funds cannot be redeemed but effective rates, including charges for interest and penalties.
the funds will make distributions through liquidation. The esti- Deferred income taxes reflect the tax consequences on future
mate of the liquidation period for each fund ranges from 2019 to years of differences between the tax bases of assets and liabilities
2022. Abbott’s unfunded commitments in these funds as of and their financial reporting amounts.
December 31, 2018 and 2017 were not significant. Investments in
the private funds (excluding private energy funds) cannot be The Tax Cuts and Jobs Act (TCJA) was enacted in the U.S. on
redeemed but the funds will make distributions through liquida- December 22, 2017. The TCJA reduces the U.S. federal corporate
tion. The estimate of the liquidation period for each fund ranges tax rate from 35% to 21%, requires companies to pay a one-time
from 2019 to 2028. Abbott’s unfunded commitment in these funds transition tax on earnings of certain foreign subsidiaries that were
was $518 million and $489 million as of December 31, 2018 and previously tax deferred and creates new taxes on certain foreign
2017, respectively. sourced earnings. As of December 31, 2018, Abbott has completed
its accounting for all of the enactment date income tax effects of
The investment mix of equity securities, fixed income and other the TCJA. If additional regulations issued by the U.S. Department
asset allocation strategies is based upon achieving a desired return, of the Treasury after December 31, 2018 result in a change in
as well as balancing higher return, more volatile equity securities judgment, the effect of such regulations will be accounted for in
with lower return, less volatile fixed income securities. Investment the period in which the regulations are finalized.
allocations are made across a range of markets, industry sectors,
capitalization sizes, and in the case of fixed income securities, Effective for fiscal years beginning after December 31, 2017, the
maturities and credit quality. The plans do not directly hold any TCJA subjects taxpayers to tax on global intangible low-taxed
securities of Abbott. There are no known significant concentra- income (GILTI) earned by certain foreign subsidiaries. In January
tions of risk in the plans’ assets. Abbott’s medical and dental plans’ 2018, the FASB staff provided guidance that an entity may make
assets are invested in a similar mix as the pension plan assets. The an accounting policy election to either recognize deferred taxes
actual asset allocation percentages at year end are consistent with related to items that will give rise to GILTI in future years or
the company’s targeted asset allocation percentages. provide for the tax expense related to GILTI in the year that the tax
is incurred. Abbott has elected to treat the GILTI tax as a period
The plans’ expected return on assets, as shown above is based on expense and provide for the tax in the year that the tax is incurred.
management’s expectations of long-term average rates of return to
be achieved by the underlying investment portfolios. In establishing In the fourth quarter of 2017, Abbott recorded an estimate of net
this assumption, management considers historical and expected tax expense of $1.46 billion for the impact of the TCJA, which was
returns for the asset classes in which the plans are invested, as included in Taxes on Earnings from Continuing Operations in the
well as current economic and capital market conditions. Consolidated Statement of Earnings. The estimate was provisional
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and included a charge of approximately $2.89 billion for the Earnings from continuing operations before taxes, and the related
transition tax, partially offset by a net benefit of approximately provisions for taxes on earnings from continuing operations, were
$1.42 billion for the remeasurement of deferred tax assets and as follows:
liabilities, and a net benefit of approximately $10 million related
to certain other impacts of the TCJA. In 2018, Abbott recorded (in millions) 2018 2017 2016
$130 million of additional tax expense which increased the final Earnings From Continuing
tax expense related to the TCJA to $1.59 billion. The $130 million Operations Before Taxes:
of additional tax expense reflects a $120 million increase in the Domestic $ (430) $ «308 $ «306
transition tax from $2.89 billion to $3.01 billion and a $10 million Foreign 3,303 1,923 1,107
reduction in the net benefit related to the remeasurement of Total $2,873 $2,231 $1,413
deferred tax assets and liabilities.
Taxes on Earnings From
The one-time transition tax is based on Abbott’s total post-1986 Continuing Operations:
earnings and profits (E&P) that were previously deferred from U.S.
Current:
income taxes. The tax computation also requires the determina-
Domestic $ (812) $2,260 $ ÷«71
tion of the amount of post-1986 E&P considered held in cash and
other specified assets. As of December 31, 2018, the remaining Foreign 606 508 406
balance of Abbott’s transition tax obligation is approximately Total current (206) 2,768 477
$1.58 billion, which will be paid over the next eight years as Deferred:
allowed by the TCJA. Domestic 832 (679) (147)
In 2018, taxes on earnings from continuing operations includes Foreign (87) (211) 20
$98 million of net tax expense related to the settlement of Abbott’s Total deferred 745 (890) (127)
2014-2016 federal income tax audit in the U.S., partial settlement Total $ «539 $1,878 $ «350
of the former St. Jude Medical consolidated group’s 2014 and 2015
federal income tax returns in the U.S. and audit settlements in Differences between the effective income tax rate and the U.S.
various countries. In 2017, taxes on earnings from continuing statutory tax rate were as follows:
operations included $435 million of tax expense related to the gain
2018 2017 2016
on the sale of the AMO business. In 2016, taxes on earnings from
Statutory tax rate on earnings from
continuing operations included the impact of a net tax benefit of
continuing operations 21.0% 35.0% 35.0%
approximately $225 million, primarily as a result of the resolution
of various tax positions from prior years, partially offset by the Impact of foreign operations (5.4) (16.3) (17.8)
unfavorable impact of non-deductible foreign exchange losses Impact of TCJA and other
related to Venezuela and the adjustment of the Mylan N.V. equity related items 6.3 65.5 —
investment, as well as the recognition of deferred taxes associated Foreign-derived intangible
with the then pending sale of AMO. income benefit (1.9) — —
Domestic impairment loss (2.1) — —
Undistributed foreign earnings remain indefinitely reinvested
Excess tax benefits related to
in foreign operations. Determining the amount of unrecognized stock compensation (3.1) (5.4) —
deferred tax liability related to any remaining undistributed
Research tax credit (1.8) (1.9) (1.8)
foreign earnings not subject to the transition tax and additional
outside basis difference in its foreign entities is not practicable. Resolution of certain tax positions
pertaining to prior years 3.4 — (16.1)
In the U.S., Abbott’s federal income tax returns through 2016 are
settled except for the federal income tax returns of the former Mylan share adjustment — — 25.5
Alere consolidated group which are settled through 2014 and the State taxes, net of federal benefit 0.4 0.5 (1.3)
former St. Jude Medical consolidated group which are settled Federal tax cost on sale of
through 2013. There are numerous other income tax jurisdictions Mylan N.V. shares — 3.4 —
for which tax returns are not yet settled, none of which are All other, net 2.0 3.4 1.3
individually significant. Reserves for interest and penalties are Effective tax rate on earnings from
not significant. continuing operations 18.8% 84.2% 24.8%
Impact of foreign operations is primarily derived from operations

in Puerto Rico, Switzerland, Ireland, the Netherlands, Costa Rica,
and Singapore.
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The tax effect of the differences that give rise to deferred tax NOTE 16—SEGMENT AND GEOGRAPHIC AREA INFORMATION
assets and liabilities were as follows: Abbott’s principal business is the discovery, development, manu-
facture and sale of a broad line of health care products. Abbott’s
(in millions) 2018 2017
products are generally sold directly to retailers, wholesalers,
Deferred tax assets: hospitals, health care facilities, laboratories, physicians’ offices and
Compensation and employee benefits $ ÷829 $ ÷881 government agencies throughout the world. On January 4, 2017,
Other, primarily reserves not currently Abbott completed the acquisition of St. Jude Medical. Beginning
deductible, and NOL’s and credit carryforwards 2,546 2,857 with the first quarter of 2017, Abbott’s cardiovascular and neuro-
Trade receivable reserves 196 185 modulation business includes the results of its historical Vascular
Inventory reserves 97 152 Products segment and the results of the businesses acquired from
Deferred intercompany profit 203 249 St. Jude Medical from the date of acquisition. On October 3, 2017,
Total deferred tax assets before valuation Abbott completed the acquisition of Alere. Beginning with the
allowance 3,871 4,324 fourth quarter of 2017, Abbott’s Diagnostic Products reportable
Valuation allowance (1,363) (1,355) segment includes the results of Alere from the date of acquisition.
Total deferred tax assets 2,508 2,969 Abbott’s reportable segments are as follows:
Deferred tax liabilities: Established Pharmaceutical Products—International sales of a
Depreciation (226) (200)
broad line of branded generic pharmaceutical products.
Other, primarily the excess of book basis over Nutritional Products—Worldwide sales of a broad line of adult and
tax basis of intangible assets (3,557) (3,385) pediatric nutritional products.
Total deferred tax liabilities (3,783) (3,585) Diagnostic Products—Worldwide sales of diagnostic systems and
Total net deferred tax assets (liabilities) $(1,275) $ (616) tests for blood banks, hospitals, commercial laboratories and
alternate-care testing sites. For segment reporting purposes, the
Abbott has incurred losses in a foreign jurisdiction where realiza-
Core Laboratories Diagnostics, Rapid Diagnostics, Molecular
tion of the future economic benefit is so remote that the benefit is
Diagnostics and Point of Care divisions are aggregated and
not reflected as a deferred tax asset.
reported as the Diagnostic Products segment. Rapid Diagnostics is
The following table summarizes the gross amounts of unrecog- the business acquired from Alere.
nized tax benefits without regard to reduction in tax liabilities or
Cardiovascular and Neuromodulation Products—Worldwide sales
additions to deferred tax assets and liabilities if such unrecognized
of rhythm management, electrophysiology, heart failure, vascular,
tax benefits were settled:
structural heart and neuromodulation products. For segment
(in millions) 2018 2017 reporting purposes, the Cardiac Arrhythmias & Heart Failure,
Vascular, Neuromodulation and Structural Heart divisions are
January 1 $1,440 $ «972
aggregated and reported as the Cardiovascular and
Decrease in tax positions due to acquisitions (13) —
Neuromodulation segment.
Increase in tax positions due to acquisitions — 479
Increase due to current year tax positions 164 187
Non-reportable segments include AMO through the date of sale
and Diabetes Care.
Increase due to prior year tax positions 235 76
Decrease due to prior year tax positions (611) (176) Abbott’s underlying accounting records are maintained on a legal
Settlements (91) (57)
entity basis for government and public reporting requirements.
Segment disclosures are on a performance basis consistent with
Lapse of statute (4) (41)
internal management reporting. The cost of some corporate func-
December 31 $1,120 $1,440
tions and the cost of certain employee benefits are charged to
The total amount of unrecognized tax benefits that, if recognized, segments at predetermined rates that approximate cost.
would impact the effective tax rate is approximately $1.02 billion. Remaining costs, if any, are not allocated to segments. In addition,
Abbott believes that it is reasonably possible that the recorded intangible asset amortization is not allocated to operating seg-
amount of gross unrecognized tax benefits may decrease within a ments, and intangible assets and goodwill are not included in the
range of $125 million to $350 million, including cash adjustments, measure of each segment’s assets.
within the next twelve months as a result of concluding various
domestic and international tax matters.
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The following segment information has been prepared in accor- (in millions) 2018 2017 2016
dance with the internal accounting policies of Abbott, as described Total Reportable Segment
above, and are not presented in accordance with generally accepted Operating Earnings $ 7,404 $ 6,625 $ 4,614
accounting principles applied to the consolidated financial statements. Corporate functions and benefit
plans costs (618) (506) (411)
Net Sales to External
Non-reportable segments 510 306 304
Customers (a) Operating Earnings (a)
Net interest expense (721) (780) (332)
(in millions) 2018 2017 2016 2018 2017 2016
Loss on extinguishment of debt (167) - -
Established
Pharmaceuticals $ 4,422 $ 4,287 $ 3,859 $ «894 $ «848 $ «723 Share-based compensation (477) (406) (310)
Nutritionals 7,229 6,925 6,899 1,652 1,589 1,660 Amortization of intangible assets (2,178) (1,975) (550)
Diagnostics 7,495 5,616 4,813 1,868 1,468 1,194 Other, net (b) (880) (1,033) (1,902)
Cardiovascular and Earnings from Continuing
Neuromodulation 9,437 8,911 2,896 2,990 2,720 1,037 Operations before Taxes $ 2,873 $ 2,231 $ 1,413
Total Reportable (b) Other, net includes inventory step-up amortization, integration costs associated with the
Segments 28,583 25,739 18,467 $7,404 $6,625 $4,614 acquisition of St. Jude Medical and Alere, and restructuring charges in 2018. In 2017,
Other, net includes inventory step-up amortization, integration costs associated with the
Other 1,995 1,651 2,386 acquisition of St. Jude Medical and Alere, and restructuring charges, partially offset by the
Total $30,578 $27,390 $20,853 gain on the sale of the AMO business. In 2016, Other, net includes the $947 million
adjustment of the Mylan equity investment and $480 million of foreign currency
(a) Net sales were unfavorably affected by the relatively stronger U.S. dollar in 2018 and 2016. exchange loss related to operations in Venezuela. Charges for restructuring actions and
Operating earnings were unfavorably affected by the impact of foreign exchange in 2018, other cost reduction initiatives were approximately $153 million in 2018, $384 million in
2017 and 2016. 2017 and $167 million in 2016.
Additions to Property, Plant

Depreciation and Equipment (c) Total Assets
(in millions) 2018 2017 2016 2018 2017 2016 2018 2017 2016
Established Pharmaceuticals $ ÷«92 $ ÷«90 $ 71 $ «131 $ «181 $ «150 $ 2,664 $ 2,728 $ 2,486
Nutritionals 150 164 160 86 147 199 3,071 3,160 3,189
Diagnostics 397 300 267 609 374 379 4,464 4,226 2,945
Cardiovascular and
Neuromodulation 248 298 69 183 206 23 4,910 5,074 1,425
Total Reportable Segments 887 852 567 1,009 908 751 $15,109 $15,188 $10,045
Other 213 194 236 385 227 370
Total $1,100 $1,046 $803 $1,394 $1,135 $1,121
(c) Amounts exclude property, plant and equipment acquired through business acquisitions.
(in millions) 2018 2017 2016 Long-lived assets on a geographic basis primarily include property,
Total Reportable Segment Assets $15,109 $15,188 $10,045 plant and equipment. It excludes goodwill, intangible assets,
Cash and investments 4,983 10,493 21,722 deferred tax assets, and financial instruments. At December 31,
Non-reportable segments 991 740 1,280
2018 and 2017, long-lived assets totaled $8.7 billion and
$8.9 billion, respectively, and in the United States such assets
Goodwill and intangible assets (d) 42,196 45,493 12,222
totaled $4.3 billion and $4.5 billion, respectively. Long-lived asset
All other (d) 3,894 4,336 7,397
balances associated with other countries were not material on an
Total Assets $67,173 $76,250 $52,666 individual country basis in either of the two years.
(d) Goodwill and intangible assets related to AMO are included in the All other line in 2016.
Net Sales to
External Customers (e)
(in millions) 2018 2017 2016
United States $10,839 $ 9,673 $ 6,486
China 2,311 2,146 1,728
Germany 1,619 1,366 1,044
India 1,333 1,237 1,114
Japan 1,326 1,255 924
Switzerland 1,005 841 766
The Netherlands 930 929 830
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All Other Countries 11,215 9,943 7,961

Consolidated $30,578 $27,390 $20,853
(e) Sales by country are based on the country that sold the product.
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NOTE 17 — QUARTERLY RESULTS (UNAUDITED)

(in millions except per share data) 2018 2017
First Quarter
Continuing Operations:
Net Sales $7,390 $6,335
Gross Profit 3,739 2,751
Earnings from Continuing Operations 409 386
Basic Earnings per Common Share 0.23 0.22
Diluted Earnings per Common Share 0.23 0.22
Net Earnings 418 419
Basic Earnings Per Common Share (a) 0.24 0.24
Diluted Earnings Per Common Share (a) 0.23 0.24
Market Price Per Share-High 64.60 45.84
Market Price Per Share-Low 55.58 38.34
Second Quarter
Net Sales $7,767 $6,637
Third Quarter
Net Sales $7,656 $6,829
Fourth Quarter
Net Sales $7,765 $7,589
Earnings (Loss) from Continuing Operations 655 (864)
Basic Earnings (Loss) per Common Share 0.37 (0.50)
Diluted Earnings (Loss) per Common Share 0.37 (0.50)
Net Earnings (Loss) 654 (828)
Basic Earnings (Loss) Per Common Share (a) 0.37 (0.48)
Diluted Earnings (Loss) Per Common Share (a) 0.37 (0.48)
(a) The sum of the four quarters of earnings per share for 2018 and 2017 may not add to the full
year earnings per share amount due to rounding and/or the use of quarter-to-date weighted
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average shares to calculate the earnings per share amount in each respective quarter.
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MANAGEMENT REPORT ON INTERNAL REPORT OF INDEPENDENT REGISTERED

CONTROL OVER FINANCIAL REPORTING PUBLIC ACCOUNTING FIRM
The management of Abbott Laboratories is responsible for estab- To the Shareholders and Board of Directors of Abbott Laboratories
lishing and maintaining adequate internal control over financial
reporting. Abbott’s internal control system was designed to pro- OPINION ON THE FINANCIAL STATEMENTS
vide reasonable assurance to the company’s management and We have audited the accompanying consolidated balance sheets
board of directors regarding the preparation and fair presentation of Abbott Laboratories and subsidiaries (the Company) as of
of published financial statements. December 31, 2018 and 2017, the related consolidated statements
All internal control systems, no matter how well designed, have of earnings, comprehensive income, shareholders’ investment
inherent limitations. Therefore, even those systems determined to and cash flows for each of the three years in the period ended
be effective can provide only reasonable assurance with respect to December 31, 2018, and the related notes (collectively referred to
financial statement preparation and presentation. as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material
Abbott’s management assessed the effectiveness of the company’s respects, the financial position of the Company as of December 31,
internal control over financial reporting as of December 31, 2018. 2018 and 2017, and the results of its operations and its cash flows
In making this assessment, it used the criteria set forth in Internal for each of the three years in the period ended December 31, 2018,
Control—Integrated Framework (2013) issued by the Committee of in conformity with U.S. generally accepted accounting principles.
Sponsoring Organizations of the Treadway Commission. Based on
our assessment, we believe that, as of December 31, 2018, the We also have audited, in accordance with the standards of the
company’s internal control over financial reporting was effective Public Company Accounting Oversight Board (United States)
based on those criteria. (PCAOB), the Company’s internal control over financial reporting
as of December 31, 2018, based on criteria established in Internal
Abbott’s independent registered public accounting firm has issued Control—Integrated Framework issued by the Committee of
an audit report on their assessment of the effectiveness of the Sponsoring Organizations of the Treadway Commission (2013
company’s internal control over financial reporting. This report framework), and our report dated February 22, 2019 expressed
appears on page 61. an unqualified opinion thereon.
Miles D. White
BASIS FOR OPINION
Chairman of the Board and Chief Executive Officer
Brian B. Yoor These financial statements are the responsibility of the Company’s
Executive Vice President, Finance and Chief Financial Officer management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a
Robert E. Funck public accounting firm registered with the PCAOB and are required
Senior Vice President, Finance and Controller to be independent with respect to the Company in accordance with
February 22, 2019 the U.S. federal securities laws and the applicable rules and regula-
tions of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial state-
ments, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reason-
able basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
Chicago, Illinois
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REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Abbott Laboratories Our audit included obtaining an understanding of internal con-
trol over financial reporting, assessing the risk that a material
OPINION ON INTERNAL CONTROL OVER weakness exists, testing and evaluating the design and operating
FINANCIAL REPORTING effectiveness of internal control based on the assessed risk, and
We have audited Abbott Laboratories and subsidiaries’ internal performing such other procedures as we considered necessary in
control over financial reporting as of December 31, 2018, based on the circumstances. We believe that our audit provides a reasonable
criteria established in Internal Control—Integrated Framework basis for our opinion.
issued by the Committee of Sponsoring Organizations of the
DEFINITION AND LIMITATIONS OF INTERNAL CONTROL
Treadway Commission (2013 framework) (the COSO criteria). In
OVER FINANCIAL REPORTING
our opinion, Abbott Laboratories and subsidiaries (the Company)
maintained, in all material respects, effective internal control over A company’s internal control over financial reporting is a process
financial reporting as of December 31, 2018, based on the COSO designed to provide reasonable assurance regarding the reliability
criteria. of financial reporting and the preparation of financial statements
We also have audited, in accordance with the standards of the for external purposes in accordance with generally accepted
Public Company Accounting Oversight Board (United States) accounting principles. A company’s internal control over financial
(PCAOB), the consolidated balance sheets of the Company as of reporting includes those policies and procedures that (1) pertain
December 31, 2018 and 2017, the related consolidated statements to the maintenance of records that, in reasonable detail, accurately
of earnings, comprehensive income, shareholders’ investment and fairly reflect the transactions and dispositions of the assets of
and cash flows for each of the three years in the period ended the company; (2) provide reasonable assurance that transactions
December 31, 2018, and the related notes of the Company and are recorded as necessary to permit preparation of financial state-
our report dated February 22, 2019 expressed an unqualified ments in accordance with generally accepted accounting principles,
opinion thereon. and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and direc-
BASIS FOR OPINION tors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisi-
The Company’s management is responsible for maintaining
tion, use, or disposition of the company’s assets that could have a
effective internal control over financial reporting and for its
material effect on the financial statements.
assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management Report on Because of its inherent limitations, internal control over financial
Internal Control Over Financial Reporting. Our responsibility is reporting may not prevent or detect misstatements. Also, projec-
to express an opinion on the Company’s internal control over tions of any evaluation of effectiveness to future periods are
financial reporting based on our audit. We are a public accounting subject to the risk that controls may become inadequate because
firm registered with the PCAOB and are required to be indepen- of changes in conditions, or that the degree of compliance with
dent with respect to the Company in accordance with the U.S. the policies or procedures may deteriorate.
federal securities laws and the applicable rules and regulations /s/ Ernst & Young LLP
of the Securities and Exchange Commission and the PCAOB.
Chicago, Illinois
We conducted our audit in accordance with the standards of February 22, 2019
the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all
material respects.
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FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
MARKET PRICE SENSITIVE INVESTMENTS A hypothetical 100-basis point change in the interest rates would
The fair value of equity securities held by Abbott with a readily not have a material effect on cash flows, income or fair values. (A
determinable fair value was approximately $13 million and 100-basis point change is believed to be a reasonably possible
$11 million as of December 31, 2018 and 2017, respectively. These near-term change in rates.)
equity securities are subject to potential changes in fair value.
FOREIGN CURRENCY SENSITIVE FINANCIAL INSTRUMENTS
A hypothetical 20 percent decrease in the share prices of these
investments would decrease their fair value at December 31, 2018 Certain Abbott foreign subsidiaries enter into foreign currency
by approximately $3 million. Changes in the fair value of these forward exchange contracts to manage exposures to changes in
securities are recorded in earnings. The fair value of investments foreign exchange rates for anticipated intercompany purchases
in mutual funds that are held in a rabbi trust for the purpose of by those subsidiaries whose functional currencies are not the U.S.
paying benefits under a deferred compensation plan was approxi- dollar. These contracts are designated as cash flow hedges of the
mately $307 million and $363 million as of December 31, 2018 and variability of the cash flows due to changes in foreign currency
2017, respectively. Changes in the fair value of these investments exchange rates and are marked-to-market with the resulting gains
are recorded in earnings. or losses reflected in Accumulated other comprehensive income
(loss). Gains or losses will be included in Cost of products sold at
NON-PUBLICLY TRADED EQUIT Y SECURITIES the time the products are sold, generally within the next twelve
Abbott holds equity securities that are not traded on public to eighteen months. At December 31, 2018 and 2017, Abbott held
stock exchanges. The carrying value of these investments was $5.1 billion and $3.3 billion, respectively, of such contracts.
$211 million and $228 million as of December 31, 2018 and 2017, Contracts held at December 31, 2018 will mature in 2019 or 2020
respectively. No individual investment is recorded at a value in depending upon the contract. Contracts held at December 31, 2017
excess of $61 million. Abbott measures these investments at cost matured in 2018 or will mature in 2019 depending upon the
minus impairment, if any, plus or minus changes resulting from contract.
observable price changes in orderly transactions for the identical Abbott enters into foreign currency forward exchange contracts
or a similar investment of the same issuer. to manage its exposure to foreign currency denominated inter-
company loans and trade payables and third-party trade payables
INTEREST RATE SENSITIVE FINANCIAL INSTRUMENTS
and receivables. The contracts are marked-to-market, and result-
At December 31, 2018 and 2017, Abbott had interest rate hedge ing gains or losses are reflected in income and are generally offset
contracts totaling $2.9 billion and $4.0 billion, respectively, to by losses or gains on the foreign currency exposure being man-
manage its exposure to changes in the fair value of debt. The effect aged. At December 31, 2018 and 2017, Abbott held $13.6 billion and
of these hedges is to change the fixed interest rate to a variable $20.1 billion, respectively, of such contracts, which mature in the
rate for the portion of the debt that is hedged. Abbott does not use next 24 months.
derivative financial instruments, such as interest rate swaps, to
In March 2017, Abbott repaid its $479 million foreign denominated
manage its exposure to changes in interest rates for its investment
short-term debt which was designated as a hedge of the net invest-
securities. The fair value of long-term debt at December 31, 2018
ment in a foreign subsidiary. At December 31, 2016, the value of
and 2017 amounted to $19.9 billion and $29.0 billion, respectively
this short-term debt was $454 million, and changes in the fair
(average interest rates of 3.5% and 3.6% as of December 31, 2018
value of the debt up through the date of repayment due to changes
and 2017, respectively) with maturities through 2046. At
in exchange rates were recorded in Accumulated other compre-
December 31, 2018 and 2017, the fair value of current and long-
hensive income (loss), net of tax.
term investment securities amounted to approximately $1.1 billion.
The following table reflects the total foreign currency forward contracts outstanding at December 31, 2018 and 2017:
2018 2017
Fair and Fair and
Weighted Carrying Weighted Carrying
Average Value Average Value
Contract Exchange Receivable/ Contract Exchange Receivable/
(dollars in millions) Amount Rate (Payable) Amount Rate (Payable)
Primarily U.S. Dollars to be exchanged for
the following currencies:
Euro $11,630 1.1938 $«13 $16,877 1.1861 $(24)
Chinese Yuan 1,592 6.9055 (10) 1,221 6.8128 (33)
Japanese Yen 1,079 108.2188 6 1,109 110.5370 15
All other currencies 4,388 n/a 10 4,230 n/a (25)
Total $18,689 $«19 $23,437 $(67)
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FINANCIAL REVIEW
Abbott’s revenues are derived primarily from the sale of a broad line United States, Western Europe, Japan, Canada, Australia and
of health care products under short-term receivable arrangements. New Zealand.)
Patent protection and licenses, technological and performance Over the last three years, Abbott’s operating margin was
features, and inclusion of Abbott’s products under a contract most positively impacted by margin improvements across various
impact which products are sold; price controls, competition and businesses, including Established Pharmaceuticals, Core
rebates most impact the net selling prices of products; and foreign Laboratory, and Diabetes Care, partially offset by higher amorti-
currency translation impacts the measurement of net sales and zation and other costs associated with the acquisitions. In 2018,
costs. Abbott’s primary products are cardiovascular and neuromod- Abbott’s operating margin increased by approximately 6 percent-
ulation products, diagnostic testing products, nutritional products age points primarily due to operating margin improvement in
and branded generic pharmaceuticals. Sales in international mar- various businesses and lower inventory step-up amortization and
kets comprise approximately 65 percent of consolidated net sales. integration costs associated with the acquisitions, partially offset
Over the last several years, Abbott proactively shaped the company by higher intangible amortization. In 2017, Abbott’s operating
with the strategic intent to deliver sustainable growth in all of its margin decreased by approximately 9 percentage points primarily
businesses. Significant steps over the last three years included: due to costs associated with the acquisitions, including higher
• In January 2017, Abbott acquired St. Jude Medical, Inc. (St. Jude intangible amortization expense, inventory step-up amortization
Medical), a global medical device manufacturer, for approxi- and integration costs, partially offset by operating margin
mately $23.6 billion, including approximately $13.6 billion in improvement in various businesses.
cash and approximately $10 billion in Abbott common shares, Since the beginning of the first quarter of 2017, the results of
based on Abbott’s closing stock price on the acquisition date. Abbott’s Cardiovascular and Neuromodulation Products seg-
As part of the acquisition, Abbott assumed, repaid or refinanced ment include Abbott’s historical Vascular Products segment
approximately $5.9 billion of St. Jude Medical’s debt. The acqui- and St. Jude Medical from the date of acquisition. Excluding the
sition provided expanded opportunities for future growth and is impact of foreign exchange, sales in the Cardiovascular and
an important part of the company’s effort to develop a strong, Neuromodulation Products segment increased 4.9 percent in 2018
diverse portfolio. The combined business competes in nearly and 207.4 percent in 2017. The sales increase in 2018 was driven
every area of the $30 billion global cardiovascular device mar- primarily by higher Structural Heart, Electrophysiology, and
ket, as well as in neuromodulation which treats chronic pain Neuromodulation sales. The sales increase in 2017 was driven by
and movement disorders. the acquisition of St. Jude Medical. Excluding the impact of the
• In October 2017, Abbott acquired Alere Inc. (Alere), a diagnostic acquisition, as well as the impact of foreign exchange, sales in the
device and service provider, for $51.00 per common share in Cardiovascular and Neuromodulation Products segment were
cash, which equated to a purchase price of approximately essentially unchanged in 2017 versus the prior year. In 2017,
$4.5 billion. As part of the acquisition, Abbott also tendered for higher structural heart and endovascular sales were offset by
Alere’s preferred shares for a total value of approximately lower coronary stent sales and the comparison impact from the
$0.7 billion and assumed and subsequently repaid approxi- favorable 2016 resolution of a third-party royalty agreement
mately $3.0 billion of Alere’s debt. The acquisition established in Abbott’s vascular business.
Abbott as a leader in point of care testing, expanded Abbott’s In 2018, operating earnings for this segment increased 9.9 percent.
global diagnostics presence and provided access to new prod- The operating margin profile declined from 35.8 percent of sales
ucts, channels and geographies. in 2016 to 31.7 percent in 2018 primarily due to the mix of business
• In February 2017, Abbott completed the sale of Abbott Medical resulting from the acquisition of St. Jude Medical and ongoing
Optics (AMO), its vision care business, to Johnson & Johnson pricing pressures in the coronary business. Cost improvement
for $4.325 billion in cash and recognized an after-tax gain of initiatives contributed to an improvement in the operating margin
$728 million. The operating results of AMO were included in profile from 30.5 percent in 2017 to 31.7 percent in 2018.
Earnings from Continuing Operations up to the date of sale as In 2018, the Cardiovascular and Neuromodulation Products
the business did not qualify for reporting as discontinued segment received approval or clearance from the U.S. Food and
operations. Drug Administration (FDA) for the following products:
The sales increase over the last three years reflects both the 2017 • the Advisor® HD Grid Mapping Catheter, Sensor Enabled™,
acquisitions of St. Jude Medical and Alere and volume growth which creates highly detailed maps of the heart and expands
across Abbott’s businesses, most notably in the Established Abbott’s electrophysiology product portfolio,
Pharmaceuticals, Diabetes Care and Diagnostics businesses. • the next-generation version of Abbott’s leading MitraClip®
Volume growth reflects the introduction of new products as well heart valve repair device,
as higher sales of existing products. In 2017, the acquisitions of • the HeartMate 3® Left Ventricular Assist Device (LVAD) as a
St. Jude Medical and Alere, partially offset by the sale of AMO, destination (long-term use) therapy, and
contributed 26.5 percentage points of Abbott’s total sales growth
versus 2016. Sales in emerging markets, which represent approxi- • the XIENCE Sierra® Drug Eluting Stent System, which is the next
mately 40 percent of total company sales, increased 12.3 percent in generation of its drug-eluting coronary stent system. The XIENCE
2018 and 13.9 percent in 2017, excluding the impact of foreign Sierra Drug Eluting Stent System also received national reimburse-
exchange. (Emerging markets include all countries except the ment in Japan to treat people with coronary artery disease.
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FINANCIAL REVIEW
In Abbott’s worldwide diagnostics business, sales growth over drove margin improvements across the business over the last three
the last three years reflected the acquisition of Alere in October years although such improvements were offset by inflation on
2017, as well as continued market penetration by the core labora- commodity costs. The decrease in operating margins for this
tory business in the U.S. and internationally. Alere’s results are business from 24.1 percent of sales in 2016 to 22.9 percent in
included in Abbott’s Diagnostic Products reportable segment 2018 was primarily due to negative impact of foreign exchange.
from the date of acquisition. Worldwide diagnostic sales increased The Established Pharmaceutical Products segment focuses on
33.6 percent in 2018 and 16.7 percent in 2017, excluding the impact the sale of its products in emerging markets. Excluding the impact
of foreign exchange. Excluding the impact of the Alere acquisi- of foreign exchange, Established Pharmaceutical sales increased
tion, as well as the impact of foreign exchange, sales in the 7.0 percent in 2018 and 9.5 percent in 2017. The sales increase in
Diagnostic Products segment increased 6.5 percent in 2018 and 2018 was driven by double-digit growth in India and China. The
5.5 percent in 2017. This growth includes the continued roll-out sales increase in 2017 was primarily driven by double-digit growth
of Alinity®, which is Abbott’s integrated family of next-generation in China and various countries in Latin America. Operating margins
diagnostic systems and solutions that are designed to increase increased from 18.7 percent of sales in 2016 to 20.2 percent in 2018
efficiency by running more tests in less space, generating test primarily due to the continued focus on cost reduction initiatives.
results faster and minimizing human errors while continuing to
provide quality results. Abbott has regulatory approvals in the U.S., In its diabetes business, Abbott received U.S. FDA approval for
Europe, China, and other markets for the “Alinity c” and “Alinity i” its FreeStyle Libre® 14 day sensor, making it the longest lasting
instruments for clinical chemistry and immunoassay diagnostics, wearable glucose sensor available. The FreeStyle Libre system is
respectively. In 2018, Abbott accelerated the launch of Alinity in the only continuous glucose monitoring system that does not
Europe and other international markets after a broad range of require any user calibration.
assays obtained regulatory approval and were added to the test In conjunction with the funding of the St. Jude Medical and Alere
menu. Abbott also continued the roll-out of “Alinity s” for blood acquisitions and the assumption of St. Jude Medical’s and Alere’s
and plasma screening. existing debt, Abbott’s total short-term and long-term debt
Margin improvement continued to be a key focus for the increased from approximately $9.0 billion at December 31, 2015 to
Diagnostics business in 2018 and 2017. While operating margins of $27.9 billion at December 31, 2017. At the beginning of 2018, Abbott
24.9 percent of sales in 2018 have remained relatively unchanged committed to reducing its debt levels and in 2018 Abbott repaid
from the 24.8 percent of sales reported in 2016, this reflects dilu- approximately $8.3 billion of debt, net of borrowings, bringing its
tion to the operating margin profit from the acquisition of Alere total debt to $19.6 billion.
and the negative impact of foreign exchange, offset by the contin- Abbott declared dividends of $1.16 per share in 2018 compared
ued execution of efficiency initiatives in the manufacturing and to $1.075 per share in 2017, an increase of approximately 8 percent.
supply chain functions. Dividends paid totaled $1.974 billion in 2018 compared to
In Abbott’s worldwide nutritional products business, sales over $1.849 billion in 2017. The year-over-year change in the amount
the last three years were positively impacted by demographics of dividends paid reflects the increase in the dividend rate.
such as an aging population and an increasing rate of chronic In December 2018, Abbott increased the company’s quarterly
disease in developed markets and the rise of a middle class in dividend by approximately 14 percent to $0.32 per share from
many emerging markets, as well as by numerous new product $0.28 per share, effective with the dividend paid in February 2019.
introductions that leveraged Abbott’s strong brands. In 2018, In 2019, Abbott will focus on continuing to invest in product
excluding the impact of foreign exchange, the nutritional business development areas that provide the opportunity for strong
experienced above-market growth in the worldwide pediatric sustainable growth over the next several years. In its diagnostics
business driven by market leading brands Similac® and Pedialyte® business, Abbott will continue to focus on driving market adoption
in the U.S. as well as growth across several markets in Asia. and geographic expansion of its Alinity suite of diagnostics instru-
Worldwide, adult nutrition sales increased in 2018 led by the ments. In the cardiovascular and neuromodulation business,
growth of Ensure®, Abbott’s market-leading complete and bal- Abbott will continue to focus on expanding its market position in
anced nutrition brand, and Glucerna®, Abbott’s market-leading various areas including electrophysiology, heart failure, and struc-
diabetes-specific nutrition brand. tural heart. In its nutritionals business, Abbott will continue to
In 2017, the nutritionals business experienced growth in the U.S. focus on driving growth globally and further enhancing its portfo-
driven by above-market performance in Abbott’s infant and tod- lio with the introduction of several new science-based products.
dler brands. Internationally, 2017 sales growth in China and India In the established pharmaceuticals business, Abbott will continue
was partially offset by challenging market conditions in the infant to focus on growing its business with the depth and breadth of its
formula market in various emerging markets. With respect to the portfolio in emerging markets. In its diabetes care business, Abbott
profitability of the nutritional products business, manufacturing will focus on driving continued market adoption of its FreeStyle
and distribution process changes, as well as other cost reductions, Libre continuous glucose monitoring system.
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FINANCIAL REVIEW
CRITICAL ACCOUNTING POLICIES Department of Agriculture (USDA) and the states submitting
Sales Rebates—In 2018, approximately 45 percent of Abbott’s rebate claims. The USDA, which administers the WIC program,
consolidated gross revenues were subject to various forms of has been making its data available for many years. Management
rebates and allowances that Abbott recorded as reductions of also estimates the states’ processing lag time based on sales and
revenues at the time of sale. Most of these rebates and allowances claims data. Inventory in the retail distribution channel does not
in 2018 are in the Nutritional Products and Diabetes Care seg- vary substantially. Management has access to several large custom-
ments. Abbott provides rebates to state agencies that administer ers’ inventory management data, which allows management to
the Special Supplemental Nutrition Program for Women, Infants, make reliable estimates of inventory in the retail distribution chan-
and Children (WIC), wholesalers, group purchasing organizations, nel. At December 31, 2018, Abbott had WIC business in 27 states.
and other government agencies and private entities. Rebate Historically, adjustments to prior years’ rebate accruals have not
amounts are usually based upon the volume of purchases using been material to net income. Abbott employs various techniques to
contractual or statutory prices for a product. Factors used in the verify the accuracy of claims submitted to it, and where possible,
rebate calculations include the identification of which products works with the organizations submitting claims to gain insight
have been sold subject to a rebate, which customer or government into changes that might affect the rebate amounts. For government
agency price terms apply, and the estimated lag time between sale agency programs, the calculation of a rebate involves interpreta-
and payment of a rebate. Using historical trends, adjusted for tions of relevant regulations, which are subject to challenge or
current changes, Abbott estimates the amount of the rebate that change in interpretation.
will be paid, and records the liability as a reduction of gross sales
Income Taxes—Abbott operates in numerous countries where its
when Abbott records its sale of the product. Settlement of the
income tax returns are subject to audits and adjustments. Because
rebate generally occurs from one to six months after sale. Abbott
Abbott operates globally, the nature of the audit items is often very
regularly analyzes the historical rebate trends and makes adjust-
complex, and the objectives of the government auditors can result
ments to reserves for changes in trends and terms of rebate
in a tax on the same income in more than one country. Abbott
programs. Rebates and chargebacks charged against gross sales
employs internal and external tax professionals to minimize audit
in 2018, 2017 and 2016 amounted to approximately $3.0 billion,
adjustment amounts where possible. In accordance with the
$2.8 billion and $2.5 billion, respectively, or 19.0 percent,
accounting rules relating to the measurement of tax contingencies,
20.5 percent and 22.9 percent of gross sales, respectively, based
in order to recognize an uncertain tax benefit, the taxpayer must
on gross sales of approximately $16.0 billion, $13.9 billion and
be more likely than not of sustaining the position, and the measure-
$10.7 billion, respectively, subject to rebate. A one-percentage
ment of the benefit is calculated as the largest amount that is more
point increase in the percentage of rebates to related gross sales
than 50 percent likely to be realized upon resolution of the benefit.
would decrease net sales by approximately $160 million in 2018.
Application of these rules requires a significant amount of judg-
Abbott considers a one-percentage point increase to be a reason-
ment. In the U.S., Abbott’s federal income tax returns through
ably likely increase in the percentage of rebates to related gross
2016 are settled except for the federal income tax returns of the
sales. Other allowances charged against gross sales were approxi-
former Alere consolidated group which are settled through 2014
mately $175 million, $166 million and $160 million for cash
and the former St. Jude Medical consolidated group which are
discounts in 2018, 2017 and 2016, respectively, and $191 million,
settled through 2013. Undistributed foreign earnings remain
$204 million and $242 million for returns in 2018, 2017 and 2016,
indefinitely reinvested in foreign operations. Determining the
respectively. Cash discounts are known within 15 to 30 days of
amount of unrecognized deferred tax liability related to any
sale, and therefore can be reliably estimated. Returns can be reli-
remaining undistributed foreign earnings not subject to the
ably estimated because Abbott’s historical returns are low, and
transition tax and additional outside basis difference in its foreign
because sales returns terms and other sales terms have remained
entities is not practicable.
relatively unchanged for several periods.
Pension and Post-Employment Benefits—Abbott offers pension
Management analyzes the adequacy of ending rebate accrual
benefits and post-employment health care to many of its employ-
balances each quarter. In the domestic nutritional business,
ees. Abbott engages outside actuaries to assist in the determination
management uses both internal and external data available to
of the obligations and costs under these programs. Abbott must
estimate the accruals. In the WIC business, estimates are required
develop long-term assumptions, the most significant of which are
for the amount of WIC sales within each state where Abbott holds
the health care cost trend rates, discount rates and the expected
the WIC contract. The state where the sale is made, which is the
return on plan assets. The discount rates used to measure liabili-
determining factor for the applicable rebated price, is reliably
ties were determined based on high-quality fixed income
determinable. Rebated prices are based on contractually obligated
securities that match the duration of the expected retiree benefits.
agreements generally lasting a period of two to four years. Except
The health care cost trend rates represent Abbott’s expected
for a change in contract price or a transition period before or after
annual rates of change in the cost of health care benefits and are a
a change in the supplier for the WIC business in a state, accruals
forward projection of health care costs as of the measurement
are based on historical redemption rates and data from the U.S.
date. A difference between the assumed rates and the actual rates,
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FINANCIAL REVIEW
which will not be known for years, can be significant in relation to resulting in additional loss provisions, or a best
the obligations and the annual cost recorded for these programs. estimate can be made, also resulting in additional loss provisions.
Low interest rates have significantly increased actuarial losses for Occasionally, a best estimate amount is changed to a lower
these plans. At December 31, 2018, pretax net actuarial losses and amount when events result in an expectation of a more favorable
prior service costs and (credits) recognized in Accumulated other outcome than previously expected. Abbott estimates the range of
comprehensive income (loss) for Abbott’s defined benefit plans possible loss to be from approximately $125 million to
and medical and dental plans were losses of $3.3 billion and $165 million for its legal proceedings and environmental expo-
$198 million, respectively. Actuarial losses and gains are amortized sures. Accruals of approximately $145 million have been recorded
over the remaining service attribution periods of the employees at December 31, 2018 for these proceedings and exposures. These
under the corridor method, in accordance with the rules for accruals represent management’s best estimate of probable loss,
accounting for post-employment benefits. Differences between as defined by FASB ASC No. 450, “Contingencies.”
the expected long-term return on plan assets and the actual
annual return are amortized over a five-year period. Note 14 to RESULTS OF OPERATIONS
the consolidated financial statements describes the impact of a SALES
one-percentage point change in the health care cost trend rate;
however, there can be no certainty that a change would be limited The following table details the components of sales growth by
to only one percentage point. reportable segment for the last two years:
Valuation of Intangible Assets—Abbott has acquired and continues Components of % Change

to acquire significant intangible assets that Abbott records at fair Business
value at the acquisition date. Transactions involving the purchase Total % Acquisitions/
or sale of intangible assets occur with some frequency between Change Divestitures Price Volume Exchange
companies in the health care field and valuations are usually based Total Net Sales
on a discounted cash flow analysis. The discounted cash flow
2018 vs. 2017 11.6 4.9 (1.0) 8.1 (0.4)
model requires assumptions about the timing and amount of
2017 vs. 2016 31.3 26.5 (0.6) 5.1 0.3
future net cash flows, risk, cost of capital, terminal values and
market participants. Each of these factors can significantly affect Total U.S.
the value of the intangible asset. Abbott engages independent 2018 vs. 2017 12.1 8.0 (1.1) 5.2 —
valuation experts who review Abbott’s critical assumptions and 2017 vs. 2016 49.1 46.9 (0.9) 3.1 —
calculations for acquisitions of significant intangibles. Abbott
Total International
reviews definite-lived intangible assets for impairment each
2018 vs. 2017 11.4 3.2 (1.0) 9.7 (0.5)
quarter using an undiscounted net cash flows approach. If the
undiscounted cash flows of an intangible asset are less than the 2017 vs. 2016 23.3 17.3 (0.4) 6.0 0.4
carrying value of an intangible asset, the intangible asset is written Established Pharmaceutical Products Segment
down to its fair value, which is usually the discounted cash flow 2018 vs. 2017 3.2 — 2.2 4.8 (3.8)
amount. Where cash flows cannot be identified for an individual 2017 vs. 2016 11.1 — 2.3 7.2 1.6
asset, the review is applied at the lowest group level for which
cash flows are identifiable. Goodwill and indefinite-lived intangible Nutritional Products Segment
assets, which relate to in-process research and development 2018 vs. 2017 4.4 — 0.2 4.7 (0.5)
acquired in a business combination, are reviewed for impairment 2017 vs. 2016 0.4 — 0.3 0.3 (0.2)
annually or when an event that could result in impairment occurs. Diagnostic Products Segment
At December 31, 2018, goodwill amounted to $23.3 billion and net 2018 vs. 2017 33.5 27.1 (2.0) 8.5 (0.1)
intangibles amounted to $18.9 billion. Amortization expense in 2017 vs. 2016 16.7 11.2 (1.1) 6.6 —
continuing operations for intangible assets amounted to
$2.2 billion in 2018, $2.0 billion in 2017 and $550 million in 2016. Cardiovascular and Neuromodulation Products Segment
There was no significant reduction of goodwill relating to impair- 2018 vs. 2017 5.9 — (2.8) 7.7 1.0
ments in 2018, 2017 and 2016. 2017 vs. 2016 207.7 207.2 (4.3) 4.5 0.3
Litigation—Abbott accounts for litigation losses in accordance The increase in Total Net Sales in 2018 reflects the acquisition of
with Financial Accounting Standards Board (FASB) Accounting Alere, as well as volume growth across all of Abbott’s businesses.
Standards Codification (ASC) No. 450, “Contingencies.” Under The increase in Total Net Sales in 2017 reflects the acquisitions
ASC No. 450, loss contingency provisions are recorded for proba- of St. Jude Medical and Alere, as well as volume growth in the
ble losses at management’s best estimate of a loss, or when a best established pharmaceuticals and diagnostics businesses. The price
estimate cannot be made, a minimum loss contingency amount is declines related to the Cardiovascular and Neuromodulation
recorded. These estimates are often initially developed substan- Products segment in 2018 and 2017 primarily reflect pricing pres-
tially earlier than the ultimate loss is known, and the estimates sure on drug eluting stents (DES) as a result of market competition
are refined each accounting period as additional information in the U.S. and other major markets.
becomes known. Accordingly, Abbott is often initially unable to
A comparison of significant product and product group sales is as
develop a best estimate of loss, and therefore the minimum
follows. Percent changes are versus the prior year and are based
amount, which could be zero, is recorded. As information
on unrounded numbers.
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Total Total Established Pharmaceutical Products sales increased

Change 7.0 percent in 2018 and 9.5 percent in 2017, excluding the impact
Total Impact of Excl. of foreign exchange. The Established Pharmaceutical Products
(dollars in millions) 2018 Change Exchange Exchange
segment is focused on several key emerging markets including
Total Established
India, Russia, China and Brazil. Excluding the impact of foreign
Pharmaceuticals —
exchange, total sales in these key emerging markets increased
Key Emerging Markets $3,363 2% (5) % 7%
7.4 percent in 2018 and 11.9 percent in 2017. Excluding the impact
Other 1,059 8 2 6
of foreign exchange, 2018 sales in India and China and 2017 sales
Nutritionals — in China and various countries in Latin America experienced
International Pediatric double-digit growth. Excluding the impact of foreign exchange,
Nutritionals 2,254 7 — 7 sales in Established Pharmaceuticals’ other emerging markets
U.S. Pediatric Nutritionals 1,843 4 — 4 increased 5.8 percent in 2018 and 2.2 percent in 2017. The 2017
International Adult sales growth for Established Pharmaceuticals’ other emerging
Nutritionals 1,900 7 (1) 8 markets includes the unfavorable impact of Venezuelan opera-
U.S. Adult Nutritionals 1,232 (2) — (2) tions. Excluding Venezuela and the effect of foreign exchange,
sales in other emerging markets increased 7.5 percent in 2017.
Diagnostics —
Core Laboratory 4,386 8 — 8 Total Nutritional Products sales increased 4.9 percent in 2018
Molecular 484 5 1 4 and 0.6 percent in 2017, excluding the unfavorable impact of
Point of Care 553 — — — foreign exchange. The increases in 2018 and 2017 U.S. Pediatric
Rapid Diagnostics 2,072 n/m n/m n/m Nutritional sales primarily reflect continued above-market perfor-
mance in Abbott’s infant and toddler brands, including Similac
Cardiovascular and and Pedialyte. 2018 International Pediatric Nutritional sales
Neuromodulation —
increased primarily due to growth in Asia and Latin America.
Rhythm Management 2,091 (1) 1 (2) The 2017 decrease in International Pediatric Nutritional sales
Electrophysiology 1,668 21 1 20 was driven by challenging market conditions in the infant formula
Heart Failure 646 — — — market in various emerging markets, partially offset by growth
Vascular 2,929 1 1 — in China and India.
Structural Heart 1,239 14 1 13
The 2018 sales increase in the International Adult Nutritional
Neuromodulation 864 7 — 7
business was led by growth of Ensure, Abbott’s market-leading
Total complete and balanced nutrition brand, and Glucerna, Abbott’s
Change market-leading diabetes-specific nutrition brand in Asia and Latin
Total Impact of Excl. America. U.S. Adult Nutritional business sales decreased in 2018
(dollars in millions) 2017 Change Exchange Exchange
primarily driven by the wind down of a non-core product line.
Total Established Excluding the unfavorable impact of foreign exchange, the 2017
Pharmaceuticals—
increase in International Adult Nutritional sales was due primar-
Key Emerging Markets $3,307 14% 2% 12%
ily to growth in Ensure, as well as volume growth in emerging
Other 980 3 1 2
markets and continued expansion of the adult nutrition category
Nutritionals— internationally. U.S. Adult Nutritional revenues decreased in 2017
International Pediatric due to competitive and market dynamics.
Nutritionals 2,112 (4) — (4)
Total Diagnostic Products sales increased 33.6 percent in 2018 and
U.S. Pediatric Nutritionals 1,777 6 — 6 16.7 percent in 2017, excluding the impact of foreign exchange. The
International Adult sales increases in 2018 and 2017 included the acquisition of Alere,
Nutritionals 1,782 3 (1) 4
which was completed on October 3, 2017. Excluding the impact
U.S. Adult Nutritionals 1,254 (3) — (3) of the acquisition, as well as the impact of foreign exchange, sales
Diagnostics— in the Diagnostic Products segment in 2018 and 2017 increased
Core Laboratory 4,063 6 — 6 6.5 and 5.5 percent, respectively. The 2018 increase in sales was
Molecular 463 2 1 1 primarily driven by above-market growth in Core Laboratory in
Point of Care 550 7 — 7 the U.S. and internationally. In 2018, Abbott accelerated the roll
Rapid Diagnostics 540 n/m n/m n/m out of its Alinity systems for Core Laboratory in Europe. The
2017 increase in sales was primarily driven by share gains in the
Cardiovascular and Core Laboratory markets globally, as well as performance in
Neuromodulation—
Point of Care led by the continued adoption of Abbott’s
Rhythm Management 2,103 n/m n/m n/m i-STAT® handheld system.
Electrophysiology 1,382 n/m n/m n/m
Heart Failure 643 n/m n/m n/m
Excluding the effect of foreign exchange, total Cardiovascular and
Neuromodulation Products sales grew 4.9 percent in 2018. The
Vascular 2,892 14 — 14
2018 sales increase was driven by growth in several areas, including
Structural Heart 1,083 208 1 207
double-digit growth in Electrophysiology and Structural Heart.
Neuromodulation 808 n/m n/m n/m
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n/m = percent change is not meaningful. The growth in Electrophysiology in 2018 was led by higher sales in
Note: In order to compute results excluding the impact of exchange rates, current year U.S. cardiac mapping and ablation catheters, as well as the U.S. launch
dollar sales are multiplied or divided, as appropriate, by the current year average foreign of Abbott’s Confirm Rx® Insertable Cardiac Monitor (ICM), the
exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior
year average foreign exchange rates.
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world’s first and only smartphone-compatible ICM designed to help defibrillators, and monitors. The warning letter relates to the
physicians remotely identify cardiac arrhythmias. In May 2018, FDA’s observations from an inspection of this facility. Abbott has
Abbott announced U.S. FDA clearance of the Advisor HD Grid prepared a comprehensive plan of corrective actions which has
Mapping Catheter, Sensor Enabled, which creates detailed maps of been provided to the FDA. Execution of the plan is progressing.
the heart and expands Abbott’s electrophysiology product portfolio.
OPERATING EARNINGS
Growth in Structural Heart in 2018 was driven by several product
areas including the MitraClip, Abbott’s market-leading device for Gross profit margins were 51.3 percent of net sales in 2018,
the minimally-invasive treatment of mitral regurgitation and the 47.5 percent in 2017 and 53.8 percent in 2016. In 2018, the increase
AMPLATZER® PFO occluder, a device designed to close a hole- primarily reflects lower inventory step-up amortization related to
like opening in the heart. In July 2018, Abbott announced U.S. the St. Jude Medical and Alere acquisitions and margin improve-
FDA approval for a next-generation version of MitraClip. In ments in various businesses, partially offset by higher intangible
September 2018, Abbott announced positive clinical results from amortization expense. In 2017, the decrease primarily reflects
its COAPT study, which demonstrated that MitraClip improved higher intangible amortization expense and inventory step-up
survival and clinical outcomes for select patients with functional amortization related to the St. Jude Medical and Alere acquisitions,
mitral regurgitation. In the fourth quarter of 2018, the COAPT partially offset by margin improvements in various businesses.
study data was submitted to the U.S. FDA to request approval of Research and development expense was $2.3 billion in 2018,
an expanded indication for MitraClip. $2.3 billion in 2017, and $1.4 billion in 2016 and represented a
The growth in Neuromodulation in 2018 reflects higher revenue 1.7 percent increase in 2018, and a 56.2 percent increase in 2017.
for various products for the treatment of chronic pain and move- The 2018 increase in research and development expenses was
ment disorders. primarily due to higher spending on various projects, partially
offset by lower restructuring and integration costs. The 2017
In Vascular, growth in imaging, vessel closure and other endovas- increase in research and development expenses was primarily
cular revenues in 2018 was partially offset by lower DES sales due due to the acquisition of the St. Jude Medical business. In 2018,
to lower U.S. market share and price erosion in various markets. research and development expenditures totaled $1.0 billion for
During the second quarter of 2018, Abbott received approval from the Cardiovascular and Neuromodulation Products segment,
the U.S. FDA for the XIENCE Sierra Drug Eluting Stent System, the $585 million for the Diagnostic Products segment, $198 million
newest generation of its coronary stent system. During the second for the Nutritional Products segment and $184 million for the
quarter of 2018, the XIENCE Sierra Drug Eluting Stent System also Established Pharmaceutical Products segment.
received national reimbursement in Japan to treat people with
coronary artery disease. In Rhythm Management, market share Selling, general and administrative expenses increased 6.1 percent
gains in the new patient segment were offset by replacement cycle in 2018 and 36.3 percent in 2017 versus the respective prior year.
dynamics. In Heart Failure, international sales growth was offset by The 2018 increase was primarily due to the impact of the acquisi-
lower U.S. sales. In October 2018, the HeartMate 3 Left Ventricular tion of the Alere business in October 2017, as well as higher
Assist Device (LVAD) received U.S. FDA approval as a destination spending to drive continued growth and market expansion in
therapy for people living with advanced heart failure. various businesses, partially offset by lower acquisition-related
expenses. The 2017 increase was primarily due to the acquisition
In 2017, excluding the effect of foreign exchange, total of the St. Jude Medical business, as well as the incremental
Cardiovascular and Neuromodulation Products sales grew expenses to integrate St. Jude Medical with Abbott’s existing
207.4 percent. The increase in sales was primarily driven by vascular business, partially offset by the impact of cost improve-
the acquisition of St. Jude Medical which was completed on ment initiatives across various functions and businesses.
January 4, 2017. Excluding the impact of the acquisition, as well
as the impact of foreign exchange, sales in the vascular business BUSINESS ACQUISITIONS
were essentially flat in 2017 versus the prior year as lower coro- On January 4, 2017, Abbott completed the acquisition of St. Jude
nary stent sales and the comparison impact from the favorable Medical, a global medical device manufacturer, for approximately
2016 resolution of a third-party royalty agreement were offset $23.6 billion, including approximately $13.6 billion in cash and
by higher structural heart and endovascular sales. approximately $10 billion in Abbott common shares, which repre-
Abbott has periodically sold product rights to non-strategic prod- sented approximately 254 million shares of Abbott common stock,
ucts and has recorded the related gains in net sales in accordance based on Abbott’s closing stock price on the acquisition date.
with Abbott’s revenue recognition policies as discussed in Note 1 As part of the acquisition, approximately $5.9 billion of St. Jude
to the consolidated financial statements. Related net sales were Medical’s debt was assumed, repaid or refinanced by Abbott.
not significant in 2018, 2017 and 2016. The acquisition provides expanded opportunities for future
The expiration of licenses and patent protection can affect the growth and is an important part of the company’s ongoing effort
future revenues and operating income of Abbott. There are no to develop a strong, diverse portfolio of devices, diagnostics,
significant patent or license expirations in the next three years nutritionals and branded generic pharmaceuticals. The combined
that are expected to materially affect Abbott. business competes in nearly every area of the cardiovascular
device market, as well as in the neuromodulation market.
In April 2017, Abbott received a warning letter from the U.S. FDA
related to its manufacturing facility in Sylmar, CA which was Under the terms of the agreement, for each St. Jude Medical
acquired by Abbott on January 4, 2017 as part of the acquisition of common share, St. Jude Medical shareholders received $46.75 in
cash and 0.8708 of an Abbott common share. At an Abbott stock
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St. Jude Medical. This facility manufactures implantable cardio-

verter defibrillators, cardiac resynchronization therapy price of $39.36, which reflected the closing price on January 4,
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2017, this represented a value of approximately $81 per St. Jude The goodwill is primarily attributable to expected synergies from
Medical common share and total purchase consideration of combining operations, as well as intangible assets that do not
$23.6 billion. The cash portion of the acquisition was funded qualify for separate recognition. The goodwill is identifiable to the
through a combination of medium and long-term debt issued in Diagnostic Products reportable segment. The approximate value
November 2016 and a $2.0 billion 120-day senior unsecured of the acquired tangible assets consists of $430 million of trade
bridge term loan facility which was subsequently repaid. accounts receivable, $425 million of inventory, $225 million of
The final allocation of the fair value of the St. Jude Medical other current assets, $540 million of property and equipment, and
acquisition is shown in the table below. $210 million of other long-term assets. The approximate value of
the acquired tangible liabilities consists of $675 million of trade
(in billions) accounts payable and other current liabilities and $145 million of
Acquired intangible assets, non-deductible $15.5 other non-current liabilities.
Goodwill, non-deductible 13.1 In the third quarter of 2017, Alere entered into agreements to sell
Acquired net tangible assets 3.0 its Triage MeterPro cardiovascular and toxicology business and
Deferred income taxes recorded at acquisition (2.7) the assets and liabilities related to its B-type Natriuretic Peptide
Net debt (5.3)
assay business run on Beckman Coulter analyzers to Quidel
Corporation (Quidel). The transactions with Quidel reflect a total
Total final allocation of fair value $23.6
purchase price of $400 million payable at the close of the transac-
The goodwill is primarily attributable to expected synergies tion, $240 million payable in six annual installments beginning
from combining operations, as well as intangible assets that do approximately six months after the close of the transaction, and
not qualify for separate recognition. The goodwill is identifiable contingent consideration with a maximum value of $40 million.
to the Cardiovascular and Neuromodulation Products reportable In the third quarter of 2017, Alere entered into an agreement with
segment. The acquired tangible assets consist primarily of trade Siemens Diagnostics Holding II B.V. (Siemens) to sell its subsidi-
accounts receivable of approximately $1.1 billion, inventory of ary, Epocal Inc., for approximately $200 million payable at the
approximately $1.7 billion, other current assets of $176 million, close of the transaction. Alere agreed to divest these businesses
property and equipment of approximately $1.5 billion, and other in connection with the review by the Federal Trade Commission
long-term assets of approximately $455 million. The acquired and the European Commission of Abbott’s agreement to acquire
tangible liabilities consist of trade accounts payable and other Alere. The sale to Quidel closed on October 6, 2017, and the sale to
current liabilities of approximately $1.1 billion and other non- Siemens closed on October 31, 2017. No gain or loss on these sales
current liabilities of approximately $870 million. was recorded in the Consolidated Statement of Earnings.
In 2016, Abbott and St. Jude Medical agreed to sell certain busi- On July 17, 2017, Abbott commenced a tender offer to purchase
nesses to Terumo Corporation for approximately $1.12 billion. The for cash the 1.77 million outstanding shares of Alere’s Series B
sale included the St. Jude Medical Angio-Seal™ and Femoseal™ Convertible Perpetual Preferred Stock at a price of $402 per share,
vascular closure and Abbott’s Vado® Steerable Sheath businesses. plus accrued but unpaid dividends to, but not including, the settle-
The sale closed on January 20, 2017 and no gain or loss was ment date of the tender offer. This tender offer was subject to the
recorded in the Consolidated Statement of Earnings. satisfaction of certain conditions, including Abbott’s acquisition of
Alere and upon there being validly tendered (and not properly
On October 3, 2017, Abbott acquired Alere, a diagnostic device withdrawn) at the expiration date of the tender offer that number
and service provider, for $51.00 per common share in cash, which of shares of Preferred Stock that equaled at least a majority of the
equated to a purchase price of approximately $4.5 billion. As part Preferred Stock issued and outstanding at the expiration of the
of the acquisition, Abbott tendered for Alere’s preferred shares for tender offer. All conditions to the offer were satisfied and Abbott
a total value of approximately $0.7 billion. In addition, approxi- accepted for payment the 1.748 million shares of Preferred Stock
mately $3.0 billion of Alere’s debt was assumed and subsequently that were validly tendered (and not properly withdrawn). The
repaid. The acquisition establishes Abbott as a leader in point of remaining shares were cashed out for an amount equal to the
care testing, expands Abbott’s global diagnostics presence and $400.00 per share liquidation preference of such shares, plus
provides access to new products, channels and geographies. accrued but unpaid dividends, without interest. Payment for all
Abbott utilized a combination of cash on hand and debt to fund of the shares of Preferred Stock was made in the fourth quarter
the acquisition. See Note 11 — Debt and Lines of Credit for further of 2017.
details regarding the debt utilized for the acquisition.
The final allocation of the fair value of the Alere acquisition is RESTRUCTURINGS
shown in the table below. In 2017 and 2018, Abbott management approved restructuring
plans as part of the integration of the acquisition of St. Jude
(in billions) Medical into the Cardiovascular and Neuromodulation Products
Acquired intangible assets, non-deductible $«3.5 segment and Alere into the Diagnostic Products segment, in
Goodwill, non-deductible 3.7 order to leverage economies of scale and reduce costs. Abbott
Acquired net tangible assets 1.0 recorded charges, including one-time employee termination
Deferred income taxes recorded at acquisition (0.4) benefits, of approximately $52 million in 2018 and $187 million
Net debt (2.6) in 2017. Approximately $5 million in 2018 and 2017 are recorded
Preferred stock (0.7)
in Cost of products sold, approximately $10 million in 2018 is
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recorded in Research and development and approximately

Total final allocation of fair value $«4.5
$37 million in 2018 and $182 million in 2017 in Selling, general
and administrative expense.
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From 2016 to 2018, Abbott management approved plans to stream- TAXES ON EARNINGS
line operations in order to reduce costs and improve efficiencies The income tax rates on earnings from continuing operations were
in various Abbott businesses including the nutritional, established 18.8 percent in 2018, 84.2 percent in 2017 and 24.8 percent in 2016.
pharmaceuticals and vascular businesses. Abbott recorded
employee-related severance and other charges of approximately The Tax Cuts and Jobs Act (TCJA) was enacted in the U.S. on
$28 million in 2018, $120 million in 2017 and $32 million in 2016. December 22, 2017. The TCJA reduces the U.S. federal corporate
Approximately $10 million in 2018, $7 million in 2017 and tax rate from 35% to 21%, requires companies to pay a one-time
$9 million in 2016 are recorded in Cost of products sold, approxi- transition tax on earnings of certain foreign subsidiaries that were
mately $2 million in 2018, $77 million in 2017 and $5 million in previously tax deferred and creates new taxes on certain foreign
2016 are recorded in Research and development and approxi- sourced earnings. As of December 31, 2018, Abbott has completed
mately $16 million in 2018, $36 million in 2017 and $18 million in its accounting for all of the enactment date income tax effects of
2016 are recorded in Selling, general and administrative expense. the TCJA. If additional regulations issued by the U.S. Department
Additional charges of approximately $2 million in 2017 and 2016 of the Treasury after December 31, 2018 result in a change in
were recorded primarily for accelerated depreciation. judgment, the effect of such regulations will be accounted for in
the period in which the regulations are finalized.
INTEREST EXPENSE AND INTEREST (INCOME) Effective for fiscal years beginning after December 31, 2017, the
In 2018, interest expense decreased primarily due to the net TCJA subjects taxpayers to tax on global intangible low-taxed
repayment of $8.3 billion of debt, partially offset by lower interest income (GILTI) earned by certain foreign subsidiaries. In January
income due to lower cash balances. In 2017, interest expense 2018, the Financial Accounting Standards Board staff provided
increased primarily due to the $15.1 billion of debt issued in guidance that an entity may make an accounting policy election to
November of 2016 related to the financing of the St. Jude Medical either recognize deferred taxes related to items that will give rise
acquisition which closed on January 4, 2017. In 2016, interest to GILTI in future years or provide for the tax expense related to
expense increased primarily due to the amortization of bridge GILTI in the year that the tax is incurred. Abbott has elected to
financing fees related to the financing of the St. Jude Medical and treat the GILTI tax as a period expense and provide for the tax in
Alere acquisitions. Interest expense in 2016 also increased due to the year that the tax is incurred.
the $15.1 billion of debt issued in November 2016. In the fourth quarter of 2017, Abbott recorded an estimate of net
DEBT EXTINGUISHMENT COSTS tax expense of $1.46 billion for the impact of the TCJA, which was
included in Taxes on Earnings from Continuing Operations in the
On October 28, 2018, Abbott redeemed approximately $4 billion Consolidated Statement of Earnings. The estimate was provisional
of debt, which included $750 million principal amount of its 2.00% and included a charge of approximately $2.89 billion for the tran-
Notes due 2020; $597 million principal amount of its 4.125% Notes sition tax, partially offset by a net benefit of approximately
due 2020; $900 million principal amount of its 3.25% Notes due $1.42 billion for the remeasurement of deferred tax assets and
2023; $450 million principal amount of its 3.4% Notes due 2023; liabilities, and a net benefit of approximately $10 million related
and $1.300 billion principal amount of its 3.75% Notes due 2026. to certain other impacts of the TCJA. In 2018, Abbott recorded
Abbott incurred a net charge of $153 million related to the early $130 million of additional tax expense which increased the final
repayment of this debt and the unwinding of related interest tax expense related to the TCJA to $1.59 billion. The $130 million
rate swaps. of additional tax expense reflects a $120 million increase in the
On March 22, 2018, Abbott redeemed all of the $947 million prin- transition tax from $2.89 billion to $3.01 billion and a $10 million
cipal amount of its 5.125% Notes due 2019, as well as $1.055 billion reduction in the net benefit related to the remeasurement of
of the $2.850 billion principal amount of its 2.35% Notes due 2019. deferred tax assets and liabilities.
Abbott incurred a net charge of $14 million related to the early The one-time transition tax is based on Abbott’s total post-1986
repayment of this debt. earnings and profits (E&P) that were previously deferred from
U.S. income taxes. The tax computation also requires the determi-
OTHER (INCOME) EXPENSE, NET
nation of the amount of post-1986 E&P considered held in cash
Other (income) expense, net, for 2018, 2017 and 2016 includes and other specified assets. As of December 31, 2018, the remaining
approximately $160 million of income in each year related to the balance of Abbott’s transition tax obligation is approximately
non-service cost components of the net periodic benefit costs $1.58 billion, which will be paid over the next eight years as
associated with the pension and post-retirement medical plans. allowed by the TCJA.
These amounts are being reported in other (income) expense as a
In 2018, taxes on earnings from continuing operations included
result of the adoption of the new accounting standard for recog-
$98 million of net tax expense related to the settlement of Abbott’s
nizing pension cost. 2017 includes a pre-tax gain of $1.163 billion
2014-2016 federal income tax audit in the U.S., partial settlement
on the sale of AMO to Johnson & Johnson. 2016 includes
of the former St. Jude Medical consolidated group’s 2014 and 2015
$947 million of expense to adjust Abbott’s holding of Mylan N.V.
federal income tax returns in the U.S. and audit settlements in
ordinary shares due to a decline in the fair value of the securities
various countries. In 2017, taxes on earnings from continuing
which was considered by Abbott to be other than temporary.
operations include $435 million of tax expense related to the gain
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on the sale of the AMO business. In 2016, taxes on earnings from transfer marketing authorizations and other regulatory require-
continuing operations include the impact of a net tax benefit of ments in various countries. Under the terms of the sale agreement
approximately $225 million, primarily as a result of the resolution with Abbott, Quidel is subject to the risks and entitled to the
of various tax positions from prior years, partially offset by the benefits generated by these operations and assets. The assets
unfavorable impact of non-deductible foreign exchange losses presented as held for disposition in the Consolidated Balance
related to Venezuela and the adjustment of the Mylan N.V. equity Sheet as of December 31, 2018 and 2017, primarily relate to the
investment, as well as the recognition of deferred taxes associated businesses sold to Quidel.
with the then pending sale of AMO. The following is a summary of the assets held for disposition as of
Exclusive of these discrete items, tax expense was favorably December 31, 2018 and 2017:
impacted by lower tax rates and tax exemptions on foreign income
primarily derived from operations in Puerto Rico, Switzerland, (in millions)
Ireland, the Netherlands, Costa Rica, and Singapore. Abbott bene- December 31 2018 2017
fits from a combination of favorable statutory tax rules, tax rulings, Trade Receivables, net $ 6 $÷12
grants, and exemptions in these tax jurisdictions. See Note 15 to Total inventories 3 8
the consolidated financial statements for a full reconciliation of Current assets held for disposition 9 20
the effective tax rate to the U.S. federal statutory rate. Net property and equipment — 56
Intangible assets, net of amortization — 18
DISCONTINUED OPERATIONS
Goodwill 17 102
Earnings from discontinued operations, net of tax of $34 million, Non-current assets held for disposition 17 176
$124 million and $321 million, in 2018, 2017 and 2016, respectively,
Total assets held for disposition $26 $196
were driven primarily by the recognition of net tax benefits as a
result of the resolution of various tax positions pertaining to
RESEARCH AND DEVELOPMENT PROGRAMS
AbbVie’s operations for years prior to the separation. On January 1,
2013, Abbott completed the separation of AbbVie Inc. (AbbVie), Abbott currently has numerous pharmaceutical, medical devices,
which was formed to hold Abbott’s research-based proprietary diagnostic and nutritional products in development.
pharmaceuticals business. Abbott has retained all liabilities for all
U.S. federal and foreign income taxes on income prior to the sepa- RESEARCH AND DEVELOPMENT PROCESS
ration, as well as certain non-income taxes attributable to AbbVie’s In the Established Pharmaceuticals segment, the development
business. AbbVie generally will be liable for all other taxes attrib- process focuses on the geographic expansion and continuous
utable to its business. improvement of the segment’s existing products to provide bene-
fits to patients and customers. As Established Pharmaceuticals
ASSETS HELD FOR DISPOSITION
does not actively pursue primary research, development usually
In September 2016, Abbott announced that it entered into a begins with work on existing products or after the acquisition
definitive agreement to sell Abbott Medical Optics (AMO), its of an advanced stage licensing opportunity.
vision care business, to Johnson & Johnson for $4.325 billion in Depending upon the product, the phases of development
cash, subject to customary purchase price adjustments for cash, may include:
debt and working capital. The decision to sell AMO reflected
Abbott’s proactive shaping of its portfolio in line with its strategic • Drug product development.
priorities. In February 2017, Abbott completed the sale of AMO to • Phase I bioequivalence studies to compare a future Established
Johnson & Johnson and recognized a pre-tax gain of $1.163 billion Pharmaceutical’s brand with an already marketed compound
including working capital adjustments, which was reported in the with the same active pharmaceutical ingredient (API).
Other (income) expense, net line of the Consolidated Statement of
Earnings in 2017. Abbott recorded an after-tax gain of $728 million • Phase II studies to test the efficacy of benefits in a small group
in 2017 related to the sale of AMO. The operating results of AMO of patients.
up to the date of sale continued to be included in Earnings from • Phase III studies to broaden the testing to a wider population
continuing operations as the business did not qualify for reporting that reflects the actual medical use.
as discontinued operations. For 2017 and 2016, the AMO earnings • Phase IV and other post-marketing studies to obtain new clini-
(losses) before taxes included in Abbott’s consolidated earnings cal use data on existing products within approved indications.
were $(18) million and $30 million, respectively.
As discussed in the Business Acquisitions section, in conjunction The specific requirements (e.g., scope of clinical trials) for
with the acquisition of Alere, Abbott sold the Triage MeterPro obtaining regulatory approval vary across different countries and
cardiovascular and toxicology business and the assets and liabili- geographic regions. The process may range from one year for a
ties related to its B-type Natriuretic Peptide assay business run on bioequivalence study project to 6 or more years for complex for-
Beckman Coulter analyzers to Quidel. The legal transfer of certain mulations, new indications, or geographic expansion in specific
assets related to these businesses did not occur at the close of the countries, such as China.
sale to Quidel due to, among other factors, the time required to
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In the Diagnostics segment, the phases of the research and devel- to CE marking of the device. For other products, the company is
opment process include: required to prepare a technical file which includes testing results
• Discovery which focuses on identification of a product that and clinical evaluations but can self-certify its ability to apply the
will address a specific therapeutic area, platform, or unmet CE mark to the product. Outside the U.S. and the EU, the regula-
clinical need. tory requirements vary across different countries and regions.
• Concept/Feasibility during which the materials and After approval and commercial launch of some cardiovascular and
manufacturing processes are evaluated, testing may include neuromodulation products, post-market trials may be conducted
product characterization and analysis is performed to con- either due to a conditional requirement of the regulatory market
firm clinical utility. approval or with the objective of proving product superiority.
• Development during which extensive testing is performed to In the second quarter of 2017, the EU adopted the new Medical
demonstrate that the product meets specified design require- Devices Regulation (MDR) and the In Vitro Diagnostic Regulation
ments and that the design specifications conform to user needs (IVDR) which replace the existing directives in the EU for medical
and intended uses. devices and in vitro diagnostic products. The MDR and IVDR will
apply after a three-year and five-year transition period, respec-
The regulatory requirements for diagnostic products vary across tively, and will impose additional premarket and postmarket
different countries and geographic regions. In the U.S., the FDA regulatory requirements on manufacturers of such products.
classifies diagnostic products into classes (I, II, or III) and the In the Nutritional segment, the research and development pro-
classification determines the regulatory process for approval. cess generally focuses on identifying and developing ingredients
While the Diagnostics segment has products in all three classes, the and products that address the nutritional needs of particular
vast majority of its products are categorized as Class I or Class II. populations (e.g., infants and adults) or patients (e.g., people with
Submission of a separate regulatory filing is not required for Class I diabetes). Depending upon the country and/or region, if claims
products. Class II devices typically require pre-market notification regarding a product’s efficacy will be made, clinical studies typi-
to the FDA through a regulatory filing known as a 510(k) submis- cally must be conducted.
sion. Most Class III products are subject to the FDA’s
Pre-Marketing Approval (PMA) requirements. Other Class III In the U.S., the FDA requires that it be notified of proposed new
products, such as those used to screen blood, require the submis- formulations and formulation or packaging changes related to
sion and approval of a Biological License Application (BLA). infant formula products. Prior to the launch of an infant formula
or product packaging change, the company is required to obtain
In the European Union (EU), diagnostic products are also catego- the FDA’s confirmation that it has no objections to the proposed
rized into different categories and the regulatory process, which is product or packaging. For other nutritional products, notification
governed by the European In Vitro Diagnostic Medical Device or pre-approval from the FDA is not required unless the product
Directive, depends upon the category. Certain product categories includes a new food additive. In some countries, regulatory
require review and approval by an independent company, known approval may be required for certain nutritional products,
as a Notified Body, before the manufacturer can affix a CE mark to including infant formula and medical nutritional products.
the product to show compliance with the Directive. Other prod-
ucts only require a self-certification process. AREAS OF FOCUS
In the Cardiovascular and Neuromodulation segment, the In 2019 and beyond, Abbott’s significant areas of therapeutic
research and development process begins with research on a focus will include the following:
specific technology that is evaluated for feasibility and commercial Established Pharmaceuticals—Abbott focuses on building country-
viability. If the research program passes that hurdle, it moves specific portfolios made up of high-quality medicines that meet
forward into development. The development process includes the needs of people in emerging markets. Over the next several
evaluation, selection and qualification of a product design, com- years, Abbott plans to expand its product portfolio in key thera-
pletion of applicable clinical trials to test the product’s safety and peutic areas with the aim of being among the first to launch new
efficacy, and validation of the manufacturing process to demon- off-patent and differentiated medicines. In addition, Abbott con-
strate its repeatability and ability to consistently meet tinues to expand existing brands into new markets, implement
pre-determined specifications. product enhancements that provide value to patients and acquire
Similar to the diagnostic products discussed above, in the U.S., strategic products and technology through licensing activities.
cardiovascular and neuromodulation products are classified as Abbott is also actively working on the further development of
Class I, II, or III. Most of Abbott’s cardiovascular and neuromodu- several key brands such as Creon™, Duphaston™, Duphalac™
lation products are classified as Class II devices that follow the and Influvac™. Depending on the product, the activities focus
510(k) regulatory process or Class III devices that are subject to on development of new data, markets, formulations, delivery
the PMA process. systems, or indications.
In the EU, cardiovascular and neuromodulation products are also Cardiovascular and Neuromodulation—Abbott’s research and
categorized into different classes and the regulatory process, development programs focus on:
which is governed by the European Medical Device Directive and • Cardiac Rhythm Management—Development of next-generation
the Active Implantable Medical Device Directive, varies by class. rhythm management technologies, including enhanced patient
Each product must bear a CE mark to show compliance with the engagement and expanded magnetic resonance
Directive. Some products require submission of a design dossier to
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(MR)-compatibility.
the appropriate regulatory authority for review and approval prior
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• Heart Failure—Continued enhancements to Abbott’s left projects currently in development. Abbott plans to manage its
ventricular assist systems and pulmonary artery heart failure portfolio of projects to achieve research and development spending
system, including enhanced connectivity, user-interfaces and that will be competitive in each of the businesses in which it partici-
remote patient monitoring. pates, and such spending is expected to approximate 7.5 percent of
• Electrophysiology—Development of next-generation total Abbott sales in 2019. Abbott does not regularly accumulate or
technologies in the areas of ablation, diagnostic, mapping make management decisions based on the total expenses incurred
and visualization and recording and monitoring. for a particular development phase in a given period.
• Vascular—Development of next-generation technologies for GOODWILL

use in coronary and peripheral vascular procedures. At December 31, 2018, goodwill recorded as a result of business
• Structural Heart—Development of minimally-invasive devices combinations totaled $23.3 billion. Goodwill is reviewed for
for the repair and replacement of heart valves and other struc- impairment annually in the third quarter or when an event that
tural heart conditions. could result in an impairment occurs, using a quantitative assess-
ment to determine whether it is more likely than not that the fair
• Neuromodulation—Development of next-generation technolo-
value of any reporting unit is less than its carrying amount. The
gies with enhanced patient and physician engagement and
income and market approaches are used to calculate the fair value
expanded MR-compatibility to treat chronic pain, movement
of each reporting unit. The results of the last impairment test
disorders and other indications.
indicated that the fair value of each reporting unit was substan-
Diabetes Care—Develop enhancements and additional indications tially in excess of its carrying value.
for the FreeStyle Libre continuous glucose monitoring system to FINANCIAL CONDITION
help patients improve their ability to manage diabetes.
CASH FLOW
Core Laboratory Diagnostics—Abbott continues to commercialize
its next-generation blood screening, immunoassay, clinical chem- Net cash from operating activities amounted to $6.3 billion,
istry and hematology systems, along with assays, including a focus $5.6 billion and $3.2 billion in 2018, 2017 and 2016, respectively.
on unmet medical need, in various areas including infectious The increase in Net cash from operating activities in 2018 was
disease, cardiac care, metabolics, oncology, as well as informatics primarily due to higher segment operating earnings, continued
and automation solutions to increase efficiency in laboratories. improvements in working capital management, timing of pension
contributions and lower acquisition-related expenses. The
Molecular Diagnostics—Several new molecular in vitro diagnostic
increase in Net cash from operating activities in 2017 was primar-
(IVD) tests and “Alinity m”, a next generation instrument system,
ily due to the favorable impact of improved working capital
are in various stages of development and launch.
management, the acquisition of the St. Jude Medical businesses,
Rapid Diagnostics—Abbott’s research and development programs and higher segment operating earnings. The income tax compo-
focus on the development of diagnostic products for cardiometa- nent of cash from operating activities in 2018 includes the
bolic disease, infectious disease and toxicology. non-cash impact of the $120 million adjustment to the transition
Nutritionals—Abbott is focusing its research and development tax associated with the TCJA. The income tax component of
spend on platforms that span the pediatric and adult nutrition operating cash flow in 2017 includes the non-cash impact of
areas: gastro intestinal/immunity health, brain health, mobility $1.46 billion of net tax expense related to the estimated impact
and metabolism, and user experience platforms. Numerous new of the TCJA. The income tax component of operating cash flow
products that build on advances in these platforms are currently in 2016 includes $550 million of non-cash tax benefits primarily
under development, including clinical outcome testing, and are related to the favorable resolution of various tax positions pertain-
expected to be launched over the coming years. ing to prior years.
Given the diversity of Abbott’s business, its intention to remain The foreign currency loss related to Venezuela reduced Abbott’s
a broad-based healthcare company and the numerous sources for cash by approximately $410 million in 2016 and is included in the
potential future growth, no individual project is expected to be Effect of exchange rate changes on cash and cash equivalents line
material to cash flows or results of operations over the next five within the Consolidated Statement of Cash Flows. Future fluctua-
years. Factors considered included research and development tions in the strength of the U.S. dollar against foreign currencies
expenses projected to be incurred for the project over the next year are not expected to materially impact Abbott’s liquidity.
relative to Abbott’s total research and development expenses, as While a significant portion of Abbott’s cash and cash equivalents
well as qualitative factors, such as marketplace perceptions and at December 31, 2018, are reinvested in foreign subsidiar-
impact of a new product on Abbott’s overall market position. There ies, Abbott does not expect such reinvestment to affect its liquidity
were no delays in Abbott’s 2018 research and development activi- and capital resources. Due to the enactment of the TCJA, if these
ties that are expected to have a material impact on operations. funds were needed for operations in the U.S., Abbott does not
While the aggregate cost to complete the numerous projects cur- expect to incur significant additional income taxes in the future to
rently in development is expected to be material, the total cost to repatriate these funds.
complete will depend upon Abbott’s ability to successfully finish Abbott funded $114 million in 2018, $645 million in 2017 and
each project, the rate at which each project advances, and the ulti- $582 million in 2016 to defined benefit pension plans. Abbott
mate timing for completion. Given the potential for significant expects pension funding of approximately $380 million in 2019 for
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delays and the risk of failure inherent in the development of medical its pension plans. Abbott expects annual cash flow from operating
device, diagnostic and pharmaceutical products and technologies, it activities to continue to exceed Abbott’s capital expenditures and
is not possible to accurately estimate the total cost to complete all cash dividends.
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DEBT AND CAPITAL • In 2017, Abbott borrowed $2.8 billion on an unsecured basis

At December 31, 2018, Abbott’s long-term debt rating was BBB under a 5-year term loan agreement and borrowed $1.7 billion
by Standard & Poor’s Corporation and Baa1 by Moody’s. Abbott under its lines of credit. Proceeds from such borrowings were
expects to maintain an investment grade rating. used to finance the acquisition of Alere, to repay certain indebt-
edness of Abbott and Alere, and to pay fees and expenses in
Abbott has readily available financial resources, including unused connection with the acquisition. The borrowings bore interest
lines of credit that support commercial paper borrowing arrange- based on a Eurodollar rate, plus an applicable margin based on
ments and provide Abbott with the ability to borrow up to Abbott’s credit ratings. Abbott paid off the term loan in January
$5 billion on an unsecured basis. The lines of credit are part of a 2018, ahead of its 2022 due date and paid off $550 million of the
2018 revolving credit agreement that expires in 2023. Abbott line of credit in the fourth quarter of 2017 and the remaining
entered into this new revolving credit agreement and terminated $1.15 billion on January 5, 2018. In the fourth quarter of 2017, in
the 2014 revolving credit agreement on November 30, 2018. There conjunction with the acquisition of Alere, Abbott assumed and
were no outstanding borrowings under the 2014 revolving credit subsequently repaid $3.0 billion of Alere’s debt.
agreement at the time of its termination. Any borrowings under
the new revolving credit agreement will bear interest, at Abbott’s • In 2017, Abbott also paid off a $479 million yen-denominated
option, based on either a base rate or Eurodollar rate, plus an short-term borrowing during the year and issued 364-day
applicable margin based on Abbott’s credit ratings. yen-denominated debt, of which $199 million and $195 million
was outstanding at December 31, 2018 and 2017, respectively.
In conjunction with the funding of the St. Jude Medical and Alere
acquisitions and the assumption of St. Jude Medical’s and Alere’s In 2018 Abbott committed to reducing its debt levels and on
existing debt, Abbott’s total short-term and long-term debt February 16, 2018, the board of directors authorized the early
increased from approximately $9.0 billion at December 31, 2015 to redemption of up to $5 billion of outstanding long-term notes.
$27.9 billion at December 31, 2017. The increase in debt included Redemptions under this authorization during 2018 included
the following transactions in 2016 and 2017: $0.947 billion principal amount of its 5.125% Notes due 2019 and
• In April 2016, Abbott obtained a commitment for a 364-day $2.850 billion principal amount of its 2.35% Notes due 2019.
senior unsecured bridge term loan facility for an amount not to Abbott incurred a net charge of $14 million related to the early
exceed $17.2 billion, comprised of $15.2 billion for a 364-day repayment of this debt.
bridge loan and $2.0 billion for a 120-day bridge loan to provide On September 17, 2018, Abbott repaid upon maturity the
financing for the acquisition of St. Jude Medical. This facility $500 million aggregate principal amount outstanding of the 2.00%
has been terminated as further discussed below. Senior Notes due 2018.
• In November 2016, Abbott issued $15.1 billion of medium and On September 27, 2018, Abbott’s wholly owned subsidiary, Abbott
long-term debt to primarily fund the cash portion of the acquisi- Ireland Financing DAC, completed a euro debt offering of
tion of St. Jude Medical. Abbott also entered into interest rate €3.420 billion of long-term debt. The proceeds equated to approxi-
swap contracts totaling $3.0 billion related to the new debt. The mately $4 billion. The notes are guaranteed by Abbott.
swaps have the effect of changing Abbott’s obligation from a fixed
On October 28, 2018, Abbott redeemed $4.0 billion principal
interest rate to a variable interest rate obligation on the related
amount of its outstanding long-term debt. This amount is in
debt instruments. The $15.2 billion component of the commit-
addition to the $5 billion authorization discussed above. In con-
ment for a bridge term loan facility terminated in November 2016
junction with the redemption, Abbott unwound approximately
when Abbott issued the $15.1 billion of long-term debt.
$1.1 billion in interest rate swaps relating to the 3.40% Note due in
• In December 2016, Abbott formalized the $2.0 billion compo- 2023 and the 3.75% Note due in 2026. Abbott incurred a net charge
nent of the bridge term loan facility and entered into a 120-day of $153 million related to the early repayment of this debt and the
bridge term loan facility that provided Abbott the ability to unwinding of related interest rate swaps.
borrow up to $2.0 billion on an unsecured basis to partially fund
The 2018 transactions described above, including the repayment
the St. Jude Medical acquisition. On January 4, 2017, as part of
of $2.8 billion under the 5-year term loan and $1.15 billion of
funding the cash portion of the St. Jude Medical acquisition,
borrowings under the lines of credit, resulted in the net repayment
Abbott borrowed $2.0 billion under the 120-day senior unse-
of approximately $8.3 billion of debt.
cured bridge term loan facility. This facility was repaid during
the first quarter of 2017. On January 25, 2019, Abbott notified the holders of its 2.80%
Notes due 2020, that it will redeem the $500 million outstanding
• In the first quarter of 2017, as part of the acquisition of St. Jude
principal amount of these notes on February 24, 2019. After the
Medical, approximately $5.9 billion of St. Jude Medical’s debt
redemption of the 2.80% Notes, approximately $700 million of the
was assumed, repaid, or refinanced by Abbott. This included the
$5 billion debt redemption authorized by Abbott’s board of direc-
exchange of certain St. Jude Medical debt obligations with an
tors in 2018 will remain available.
aggregate principal amount of approximately $2.9 billion for
approximately $2.9 billion of debt issued by Abbott. Following In September 2014, the board of directors authorized the repur-
this exchange, approximately $194.2 million of existing St. Jude chase of up to $3.0 billion of Abbott’s common shares from time to
Medical notes remained outstanding. There were no significant time. Under the program authorized in 2014, Abbott repurchased
costs associated with the exchange of this debt. In addition, 36.2 million shares at a cost of $1.7 billion in 2015, 10.4 million
during the first quarter of 2017, Abbott assumed and subse- shares at a cost of $408 million in 2016 and 1.9 million shares at a
quently repaid approximately $2.8 billion of various St. Jude cost of $130 million in 2018 for a total of approximately $2.2 billion.
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On April 27, 2016, the board of directors authorized the issuance VENEZUEL A OPERATIONS
and sale for general corporate purposes of up to 75 million com- Since January 2010, Venezuela has been designated as a highly
mon shares that would result in proceeds of up to $3 billion. inflationary economy under U.S. GAAP. On February 17, 2016, the
No shares have been issued under this authorization. Venezuelan government announced that its three-tier exchange
Abbott declared dividends of $1.16 per share in 2018 compared to rate system would be reduced to two rates renamed the DIPRO and
$1.075 per share in 2017, an increase of approximately 8 percent. DICOM rates. The DIPRO was the official rate for food and medi-
Dividends paid were $1.974 billion in 2018 compared to cine imports and was adjusted from 6.3 to 10 bolivars per U.S.
$1.849 billion in 2017. The year-over-year change in dividends dollar. The DICOM rate was a floating market rate published daily
paid reflects the impact of the increase in the dividend rate. by the Venezuelan central bank, which at the end of the first quar-
ter of 2016 was approximately 263 bolivars per U.S. dollar. As a
WORKING CAPITAL result of decreasing government approvals to convert bolivars to
Working capital was $5.6 billion at December 31, 2018 and U.S. dollars to pay for intercompany accounts, as well as the accel-
$11.2 billion at December 31, 2017. The decrease in working capital in erating deterioration of economic conditions in the country, Abbott
2018 reflects the use of cash to repay long-term debt and dividends. concluded that it was appropriate to move to the DICOM rate at
the end of the first quarter of 2016. As a result, Abbott recorded a
Abbott monitors the credit worthiness of customers and establishes foreign currency exchange loss of $480 million in 2016 to revalue
an allowance against a trade receivable when it is probable that the its net monetary assets in Venezuela. After the revaluation, Abbott’s
balance will not be collected. In addition to closely monitoring investment in its Venezuelan operations was not significant.
economic conditions and budgetary and other fiscal developments,
Abbott regularly communicates with its customers regarding the CAPITAL EXPENDITURES
status of receivable balances, including their payment plans and
Capital expenditures of $1.4 billion in 2018, $1.1 billion in 2017 and
obtains positive confirmation of the validity of the receivables.
$1.1 billion in 2016 were principally for upgrading and expanding
Abbott also monitors the potential for and periodically has utilized
manufacturing and research and development facilities and equip-
factoring arrangements to mitigate credit risk although the receiv-
ment in various segments, investments in information technology,
ables included in such arrangements have historically not been a
and laboratory instruments placed with customers.
material amount of total outstanding receivables.
CONTRACTUAL OBLIGATIONS
The table below summarizes Abbott’s estimated contractual obligations as of December 31, 2018.
Payments Due By Period
2024 and
(in millions) Total 2019 2020 - 2021 2022 - 2023 Thereafter
Long-term debt, including current maturities $19,626 $ ÷ 7 $4,658 $3,105 $11,856
Interest on debt obligations 10,237 668 1,312 1,102 7,155
Operating lease obligations 984 218 302 193 271
Capitalized auto lease obligations 41 14 27 — —
Purchase commitments (a) 2,591 2,454 103 21 13
Other long-term liabilities (b) 3,492 — 1,288 884 1,320
Total (c) $36,971 $3,361 $7,690 $5,305 $20,615
(a) Purchase commitments are for purchases made in the normal course of business to meet operational and capital expenditure requirements.
(b) Other long-term liabilities include estimated payments for the transition tax under the TCJA, net of applicable credits.
(c) Net unrecognized tax benefits totaling approximately $465 million are excluded from the table above as Abbott is unable to reasonably estimate the period of cash settlement with the respec-
tive taxing authorities on such items. See Note 15 – Taxes on Earnings from Continuing Operations for further details. The company has employee benefit obligations consisting of pensions
and other post-employment benefits, including medical and life, which have been excluded from the table. A discussion of the company’s pension and post-retirement plans, including funding
matters is included in Note 14 – Post-employment Benefits.
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CONTINGENT OBLIGATIONS pension cost per year was applied retrospectively. As a result,
Abbott has periodically entered into agreements with other com- approximately $160 million of net pension-related income per
panies in the ordinary course of business, such as assignment of year was moved from the operating lines of the Consolidated
product rights, which has resulted in Abbott becoming secondarily Statement of Earnings to non-operating income for 2017 and 2016.
liable for obligations that Abbott was previously primarily liable. In November 2016, the FASB issued ASU 2016-18, Statement of
Since Abbott no longer maintains a business relationship with the Cash Flows: Restricted Cash, which requires that restricted cash
other parties, Abbott is unable to develop an estimate of the maxi- be included with cash and cash equivalents when reconciling the
mum potential amount of future payments, if any, under these beginning and end-of-period total amounts shown on the state-
obligations. Based upon past experience, the likelihood of payment of cash flows. Abbott adopted this standard beginning in
ments under these agreements is remote. In addition, Abbott the first quarter of 2018, and applied the guidance retrospectively
periodically acquires a business or product rights in which Abbott to all periods presented. Abbott did not have any restricted cash
agrees to pay contingent consideration based on attaining certain balances in the periods presented except for $75 million of
thresholds or based on the occurrence of certain events. restricted cash acquired as part of the Alere acquisition in October
2017. The restrictions on this cash were eliminated prior to the
LEGISL ATIVE ISSUES
end of 2017.
Abbott’s primary markets are highly competitive and subject to
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic
substantial government regulations throughout the world. Abbott
740): Intra-Entity Transfers of Assets Other Than Inventory, which
expects debate to continue over the availability, method of deliv-
requires the recognition of the income tax effects of intercompany
ery, and payment for health care products and services. It is not
sales and transfers of assets, other than inventory, in the period in
possible to predict the extent to which Abbott or the health care
which the transfer occurs. Abbott adopted the standard on January
industry in general might be adversely affected by these factors
1, 2018, using a modified retrospective approach and recorded a
in the future. A more complete discussion of these factors is
cumulative catch-up adjustment to Earnings employed in the busi-
contained in Item 1, Business, and Item 1A, Risk Factors.
ness in the Consolidated Balance Sheet that was not significant.
RECENTLY ISSUED ACCOUNTING STANDARDS In August 2016, the FASB issued ASU 2016-15, Statement of Cash
In February 2018, the FASB issued ASU 2018-02, Reclassification of Flows: Classification of Certain Cash Receipts and Cash Payments,
Certain Tax Effects from Accumulated Other Comprehensive Income, which clarifies how companies should present and classify certain
which allows companies to reclassify stranded tax effects resulting cash receipts and cash payments in the statement of cash flows.
from the TCJA, from accumulated other comprehensive income The ASU became effective for Abbott in the first quarter of 2018
(loss) to retained earnings (Earnings employed in the business). and did not have a material impact to the Company’s Consolidated
The standard would have become effective for Abbott beginning in Statement of Cash Flows.
the first quarter of 2019, with early adoption permitted. Abbott In February 2016, the FASB issued ASU 2016-02, Leases, which
elected to adopt the new standard at the beginning of the fourth requires lessees to recognize assets and liabilities for most leases
quarter of 2018. As a result of the adoption of the new standard, on the balance sheet. The standard becomes effective for Abbott
approximately $337 million of stranded tax effects were reclassified beginning in the first quarter of 2019. Abbott completed a detailed
from Accumulated other comprehensive income (loss) to Earnings review of its leases. Abbott will use the modified retrospective
employed in the business. approach with the package of practical expedients which allows
In August 2017, the FASB issued ASU 2017-12, Targeted Improvements Abbott to carry forward the historical lease classification for exist-
to Accounting for Hedging Activities, which makes changes to the ing or expired leases and to account for lease and non-lease
designation and measurement guidance for qualifying hedging components as a single lease component for its lessee arrange-
relationships and the presentation of hedge results. The standard ments. Abbott does not expect the new lease accounting standard
would have become effective for Abbott beginning in the first to have a material impact on the amounts reported in the
quarter of 2019, with early adoption permitted. Abbott elected to Consolidated Statement of Earnings. As a result of adopting ASU
early adopt ASU 2017-12 in the fourth quarter of 2018. The impact 2016-02, Abbott expects to record approximately $800 million to
of adopting the standard is not significant to Abbott’s Consolidated $900 million of right of use assets and lease liabilities for operat-
Balance Sheet and Consolidated Statement of Earnings. ing leases on the Consolidated Balance Sheet.
In March 2017, the FASB issued ASU 2017-07, Compensation — In January 2016, the FASB issued ASU 2016-01, Financial
Retirement Benefits (Topic 715): Improving the Presentation of Net Instruments – Recognition and Measurement of Financial Assets and
Periodic Pension Cost and Net Periodic Postretirement Benefit Cost Financial Liabilities, which provides new guidance for the recogni-
which changes the financial statement presentation requirements tion, measurement, presentation, and disclosure of financial assets
for pension and other postretirement benefit expense. While and liabilities. Abbott adopted the standard on January 1, 2018.
service cost continues to be reported in the same financial state- Under the new standard, changes in the fair value of equity invest-
ment line items as other current employee compensation costs, the ments with readily determinable fair values are recorded in Other
ASU requires all other components of pension and other postre- (income) expense, net within the Consolidated Statement of
tirement benefit expense to be presented separately from service Earnings. Previously, such fair value changes were recorded in
cost, and outside any subtotal of income from operations. The other comprehensive income. Abbott has elected the measurement
standard was adopted by Abbott beginning in the first quarter of alternative allowed by ASU 2016-01 for its equity investments
2018. The change in the presentation of the components of without readily determinable fair values. These investments are
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resulting from observable price changes in orderly transactions to customers in an amount that reflects the consideration to
for an identical or similar investment of the same issuer. Changes in which the entity expects to be entitled in exchange for those
the measurement of these investments are being recorded in Other goods or services. Abbott adopted the new standard as of
(income) expense, net within the Consolidated Statement of January 1, 2018, using the modified retrospective approach
Earnings. As part of the adoption, the cumulative-effect adjustment method. Under this method, entities recognize the cumulative
to Earnings employed in the business in the Consolidated Balance effect of applying the new standard at the date of initial applica-
Sheet for net unrealized losses on equity investments that were tion with no restatement of comparative periods presented. The
recorded in Accumulated other comprehensive income (loss) as cumulative effect of applying the new standard resulted in an
of December 31, 2017 was not significant. increase to Earnings employed in the business in the
In May 2014, the FASB issued ASU 2014-09, Revenue from Consolidated Balance Sheet of $23 million which was recorded
Contracts with Customers, which provides a single comprehensive on January 1, 2018. The new standard has been applied only to
model for accounting for revenue from contracts with customers those contracts that were not completed as of January 1, 2018.
and supersedes nearly all previously existing revenue recognition The impact of adopting ASU 2014-09 was not significant to indi-
guidance. The core principle of the ASU is that an entity should vidual financial statement line items in the Consolidated Balance
recognize revenue when it transfers promised goods or services Sheet and Consolidated Statement of Earnings.
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995—

including those made in this document, are subject to risks and
A CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
uncertainties that may cause actual results to differ materially
Under the safe harbor provisions of the Private Securities from those projected. Economic, competitive, governmental,
Litigation Reform Act of 1995, Abbott cautions investors that any technological and other factors that may affect Abbott’s operations
forward-looking statements or projections made by Abbott, are discussed in Item 1A, Risk Factors.
PERFORMANCE GRAPH
$250 This graph compares the change

in Abbott’s cumulative total shareholder
return on its common shares with the
Standard & Poor’s 500 Index and the
$200
Standard & Poor’s 500 Health Care Index.
Abbott Laboratories
$150 S&P 500 Index
S&P 500 Health Care
$100
$50
2013 2014 2015 2016 2017 2018
Assuming $100 invested on December 31, 2013 with dividends reinvested.
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S U M M A R Y O F S E L E C T E D F I N A N C I A L D ATA
(Dollars in millions except per share data)
Year Ended December 31 2018 2017 2016 2015(a) 2014
Summary of Operations:
Net Sales $ 30,578 27,390 20,853 20,405 20,247
Cost of products sold $ 14,884 14,384 9,644 9,354 9,785
Research & development $ 2,300 2,260 1,447 1,408 1,349
Selling, general, and administrative $ 9,744 9,182 6,736 6,791 6,540
Operating earnings $ 3,650 1,564 3,026 2,853 2,573
Interest expense $ 826 904 431 163 150
Interest income $ (105) (124) (99) (105) (77)
Other (income) expense, net $ 56 (1,447) 1,281 (388) (18)
Earnings before taxes $ 2,873 2,231 1,413 3,183 2,518
Taxes on earnings from continuing operations $ 539 1,878 350 577 797
Earnings from continuing operations $ 2,334 353 1,063 2,606 1,721
Net earnings $ 2,368 477 1,400 4,423 2,284
Basic earnings per common share from continuing operations $ 1.32 0.20 0.71 1.73 1.13
Basic earnings per common share $ 1.34 0.27 0.94 2.94 1.50
Diluted earnings per common share from continuing operations $ 1.31 0.20 0.71 1.72 1.12
Diluted earnings per common share $ 1.33 0.27 0.94 2.92 1.49
Financial Positions:
Working capital (b) $ 5,620 11,235 20,116 4,969 3,089
Long-term investment securities $ 897 883 2,947 4,041 229
Net property & equipment $ 7,563 7,607 5,705 5,730 5,935
Total assets $ 67,173 76,250 52,666 41,247 41,207
Long-term debt, including current portion $ 19,366 27,718 20,684 5,874 3,448
Shareholders’ investment $ 30,722 31,098 20,717 21,326 21,639
Book value per share $ 17.50 17.84 14.07 14.48 14.35
Other Statistics:
Gross profit margin % 51.3 47.5 53.8 54.2 51.7
Research and development to net sales % 7.5 8.3 6.9 6.9 6.7
Net cash from operating activities $ 6,300 5,570 3,203 2,966 3,675
Capital expenditures $ 1,394 1,135 1,121 1,110 1,077
Cash dividends declared per common share $ 1.16 1.075 1.045 0.98 0.90
Common shares outstanding (in thousands) 1,755,619 1,743,602 1,472,869 1,472,665 1,508,035
Number of common shareholders 42,827 44,581 45,545 47,278 55,171
Market price per share—high $ 74.92 57.77 45.79 51.74 46.50
Market price per share—low $ 55.58 38.34 36.00 39.00 35.65
Market price per share—close $ 72.33 57.07 38.41 44.91 45.02
(a) In February 2015, Abbott completed the disposition of the developed markets branded generics pharmaceuticals and animal health businesses.
See Note 4 to the Consolidated Financial Statements for additional information.
(b) In 2016, working capital includes $13.6 billion of cash that was used to fund the cash portion of the St. Jude Medical acquisition on January 4, 2017.
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D I R E C T O R S A N D C O R P O R AT E O F F I C E R S
D I R EC TO R S S E N I O R M A N AG E M E N T CO R P O R AT E V I C E Scott M. Leinenweber
PRESIDENTS Vice President,
Robert J. Alpern, M.D. Miles D. White*
Investor Relations,
Ensign Professor of Medicine, Chairman of the Board Gregory A. Ahlberg
Licensing and Acquisitions
Professor of Internal Medicine, and and Chief Executive Officer Vice President,
Dean of Yale School of Medicine, Diagnostics, David P. Mark
Robert B. Ford*
New Haven, Conn. Commercial Operations, Vice President,
President and
Europe, Middle East and Africa Internal Audit
Roxanne S. Austin Chief Operating Officer
President and Chief Executive Officer Keith Boettiger Louis H. Morrone
Hubert L. Allen*
Austin Investment Advisors, Vice President, Vice President,
Executive Vice President,
Newport Beach, Calif. Neuromodulation Transfusion Medicine
General Counsel and Secretary
Sally E. Blount, Ph.D. Melissa D. Brotz Mark W. Murphy, II
Brian J. Blaser*
Michael L. Nemmers Vice President, Vice President,
Professor of Strategy and Public Affairs and Business and Technology Services
Diagnostics Products
former Dean of the Corporate Marketing
J.L. Kellogg Graduate School Martin Nordenstahl
John M. Capek, Ph.D.*
of Management P. Claude Burcky Vice President,
at Northwestern University, Vice President, Nutrition,
Ventures
Evanston, Ill. Government Affairs Asia Pacific
Stephen R. Fussell*
Michelle A. Kumbier Christopher J. Calamari Joseph L. Novak
Senior Vice President and Vice President, Vice President,
Human Resources
Chief Operating Officer, Pediatric Nutrition Taxes
Harley-Davidson Motor Company, Andrew H. Lane*
Kathryn S. Collins Niamh Pellegrini
Milwaukee, Wisc. Executive Vice President,
Vice President, Vice President,
Established Pharmaceuticals
Edward M. Liddy Commercial Legal Operations Commercial Operations,
Retired Chairman Daniel Salvadori* Abbott Vascular
Michael D. Dale
and CEO, Executive Vice President,
Nutritional Products Vice President, Karen M. Peterson
The Allstate Corporation, Structural Heart Vice President,
Northbrook, Ill. Brian B. Yoor* Treasurer
Thomas C. Evers
Nancy McKinstry Executive Vice President,
Finance and Vice President, Christopher J. Scoggins
Chief Executive Officer U.S. Government Affairs Vice President,
and Chairman of the Chief Financial Officer
Diabetes Care,
Executive Board of John S. Frels
Roger M. Bird* Commercial Operations
Wolters Kluwer N.V., Vice President,
Senior Vice President,
Alphen aan den Rijn, U.S. Nutrition Research and Development, Eric Shroff
The Netherlands Immunoassay/Clinical Chemistry Vice President,
Sharon J. Bracken* Abbott Point of Care
Phebe N. Novakovic Renaud Gabay
Senior Vice President,
Chairman and Vice President, King Hon To
Rapid Diagnostics
Chief Executive Officer, Nutrition, North Asia Vice President,
General Dynamics Corporation, Charles R. Brynelsen* Core Lab Diagnostics
John F. Ginascol
Falls Church, Va. Senior Vice President, Commercial Operations,
Vice President,
Abbott Vascular Asia Pacific
William A. Osborn Nutrition, Supply Chain
Retired Chairman and Jaime Contreras* Kwang Ming Tu
Jeffrey N. Haas
Chief Executive Officer, Senior Vice President, Vice President,
Vice President,
Northern Trust Corporation Core Laboratory Diagnostics, Abbott Diagnostics Division,
Infectious Disease,
and The Northern Trust Company, Commercial Operations China
Developed Markets
Chicago, Ill. Robert E. Funck* Andrea F. Wainer
Damian P. Halloran
Samuel C. Scott III Senior Vice President, Vice President,
Vice President,
Retired Chairman, President Finance and Controller Molecular Diagnostics
Infectious Disease,
and Chief Executive Officer, Sammy Karam* Emerging Markets Frank Weitekamper
Corn Products International, Inc., Senior Vice President, Vice President,
Westchester, Ill. Gene Huang, Ph.D.
Established Pharmaceuticals, Abbott Transition Organization
Vice President,
Daniel J. Starks Emerging Markets
Chief Economist Randel W. Woodgrift
Retired Chairman, President Joseph Manning* Vice President,
and Chief Executive Officer, Gary C. Johnson
Senior Vice President, Global Operations,
St. Jude Medical, Inc., Vice President,
International Nutrition Cardiovascular and Neuromodulation
St. Paul, Minn. Clinical, Regulatory and Health
Corlis D. Murray Economics Outcomes Research, James E. Young
John G. Stratton Senior Vice President, Cardiovascular and Neuromodulation Vice President,
Retired Executive Vice President and Quality Assurance, Regulatory and Chief Ethics and
President of Global Operations, Brian Lehman
Engineering Services Compliance Officer
Verizon Communications Inc., Vice President,
New York, New York Michael J. Pederson* Commercial Operations, Jawad Zia
Senior Vice President, Cardiac Arrythmias/Heart Failure Vice President,
Glenn F. Tilton CRM and AF/EP Established Pharmaceuticals,
Retired Chairman, President and India
Chief Executive Officer, Jared L. Watkin*
UAL Corporation Senior Vice President,
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Chicago, Ill. Diabetes Care

Miles D. White Alejandro D. Wellisch*
Chairman of the Board Senior Vice President,
and Chief Executive Officer, Established Pharmaceuticals,
Abbott Laboratories Latin America
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*Denotes executive officer 79
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S H A R E H O L D E R A N D C O R P O R AT E I N F O R M AT I O N
SHARES LISTING D I V I D E N D D I R EC T D E P O S I T I N V E S TO R N E W S L I N E
The ticker symbol for Abbott’s common Shareholders may have quarterly dividends (224) 667-7300
shares is ABT. The principal market for deposited directly into a checking or savings
I N V E S TO R R E L AT I O N S
Abbott’s common shares is the New York account at any financial institution that
Stock Exchange. Shares are also listed on participates in the Automated Clearing Dept. 362, AP6D2
the Chicago Stock Exchange and traded on House system. For more information, Abbott
various regional and electronic exchanges. please contact the transfer agent, listed 100 Abbott Park Road
Outside the United States, Abbott’s shares below, right. Abbott Park, IL 60064-6400 U.S.A.
are listed on the Swiss Stock Exchange. (224) 667-6100
D I R EC T R EG I S T R AT I O N S Y S T E M
Q UA R T E R LY D I V I D E N D DAT E S SHAREHOLDER SERVICES,
In August 2008, Abbott implemented a
T R A N S FE R AG E N T A N D R EG I S T R A R
Dividends are expected to be declared, Direct Registration System (DRS) for all
recorded, and paid on the following registered shareholder transactions. Computershare
schedule in 2019, pending approval by the Shareholders will be sent a statement in P.O. Box 43078
Board of Directors: lieu of a physical stock certificate for Providence, RI 02940-3078
Abbott Laboratories stock. Please contact (888) 332-2268 (U.S. or Canada)
Quarter Declared Recorded Paid (781) 575-3910 (outside U.S. or Canada)
the transfer agent with any questions.
First 2/22 4/15 5/15 www.computershare.com
A N N UA L M E E T I N G
Second 6/14 7/15 8/15 CO R P O R AT E S EC R E TA RY
The Annual Meeting of Shareholders will
Third 9/12 10/15 11/15 Dept. 364, AP6D2
be held at 9 a.m. on Friday, April 26, 2019,
Fourth 12/13 1/15/20 2/14/20 at Abbott’s corporate headquarters. Abbott
Questions regarding the annual meeting 100 Abbott Park Road
may be directed to the Corporate Secretary. Abbott Park, IL 60064-6400 U.S.A.
TA X INFORM ATION FOR SHAREHOLDERS
A copy of Abbott’s 2018 Form 10-K Annual (224) 667-6100
Abbott is an Illinois High Impact
Business and is located in a U.S. federal Report, as filed with the Securities and WE B S I T E
Foreign Trade Sub-Zone (Sub-Zone 22F). Exchange Commission, is available on the
www.abbott.com
Dividends may be eligible for a subtraction Abbott Web site at www.abbott.com or by
from base income for Illinois income- contacting the Investor Newsline. A B B OT T O N L I N E A N N UA L R E P O R T
tax purposes. C EO A N D C FO C E R T I FI C AT I O N S www.abbott.com/annualreport
If you have any questions, please contact In 2018, Abbott’s chief executive officer G LO B A L C I T IZ E N S H I P R E P O R T
your tax advisor. (CEO) provided to the New York Stock www.abbott.com/citizenship
Exchange the annual CEO certification
D I V I D E N D R E I N V E S TM E N T P L A N
regarding Abbott’s compliance with the S H A R E H O L D E R I N FO R M AT I O N
The Abbott Dividend Reinvestment New York Stock Exchange’s corporate- Shareholders with questions about their
Plan offers registered shareholders governance listing standards. In addition, accounts may contact the transfer agent.
an opportunity to purchase additional Abbott’s CEO and chief financial officer
shares, commission-free, through Individuals who would like to receive
(CFO) filed with the U.S. Securities and additional information, or have questions
automatic dividend reinvestment and/or Exchange Commission all required
optional cash investments. Interested regarding Abbott’s business activities, may
certifications regarding the quality of call the Investor Newsline, write Abbott
persons may contact the transfer agent Abbott’s public disclosures in its fiscal
listed in the right-hand column, or Investor Relations, or visit Abbott’s Web site.
2018 reports.
call Abbott’s Investor Newsline.
Abbott trademarks and products Some statements in this annual report may be forward- The Abbott 2018 Annual Report was printed with the use
in-licensed by Abbott are shown in looking statements for purposes of the Private Securities of renewable wind power resulting in nearly zero carbon
italics in the text of this report. Litigation Reform Act of 1995. Abbott cautions that emissions, keeping 16,425 pounds of CO2 from the atmosphere.
these forward-looking statements are subject to risks This amount of wind-generated electricity is equivalent to
© 2019 Abbott Laboratories and uncertainties that may cause actual results to differ 14,251 miles not driven in an automobile or 1,187 trees planted.
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materially from those indicated in the forward-looking The Abbott Annual Report cover and text is printed on recycled
statements. Economic, competitive, governmental, paper that contains a minimum of 10% post-consumer fiber and
technological and other factors that may affect Abbott’s the financial pages on 30% post-consumer fiber.
operations are discussed in Item 1A, “Risk Factors,” in
our Securities and Exchange Commission 2018 Form
10-K and are incorporated by reference. We undertake no
obligation to release publicly any revisions to forward-
looking statements as the result of subsequent events or
developments, except as required by law.
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2018 ANNUAL REPORT

Abbott helps people around the world live TABLE OF CONTENTS

FRONT COVER STORY:

SADIE RUTENBERG As a participant in a clinical trial, Sadie was the first

Dear Fellow Our performance in 2018

LET TER TO OUR SHAREHOLDERS

THE COMPANY with the future of health technology

Our foundational goal – the company’s BALANCE

LET TER TO OUR SHAREHOLDERS

Growth of this magnitude is rare for Sustainability is the guiding principle

2018 FINANCIAL HIGHLIGHTS

We’ve aligned our business with We’ve created a complementary

We have a long-established, We’ve built a culture – and

Over the past five years, Abbott

Abbott is in the business of life.

Infinity DBS was Both our Infinity and Proclaim platforms

SETTING THE PACE

MARIA ROSARIO RODRIGUEZ

Abbott is working to transform the treatment

We also offer the EnSite Precision cardiac mapping

26 million MANAGEMENT PORTFOLIO

Masae was definitely not

FASTEST-GROWING pharmaceutical company in

In our branded-generic medicines business, high quality

We offer market-specific product portfolios that reflect

DAGOBERTO LOPEZ BOGOTÁ, COLOMBIA

ETERSA (Dasatinib) is a treatment

GAME-CHANGING SAGHAR MISSAGHIAN-CULLY

SOLUTIONS FOR LONDON, ENGLAND

A UNIFIED FAMILY OF INTEGRATED SYSTEMS

BUILDING ON OUR LEADERSHIP

Our complete portfolio

THE KIKA TROUPE

BALANCED AND TARGETED

MAKEBA GILES Makeba is a lifestyle blogger and the busy mom of

#1 >8 million people

ENSURE MAX PROTEIN HELPS ADULTS

A STRONG START FOR

33 Consolidated Statement of Earnings 60 Report of Independent Registered

60 Management Report on Internal 79 Directors and Corporate Officers

ABBOTT 2018 ANNUAL REPORT

Year Ended December 31 2018 2017 2016

Earnings from Continuing Operations 2,334 353 1,063

Earnings from Discontinued Operations, net of taxes 34 124 321

Net Earnings $÷2,368 $÷÷«477 $÷1,400

Basic Earnings Per Common Share —

Diluted Earnings Per Common Share —

Average Number of Common Shares Outstanding Used for Basic

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ABBOTT 2018 ANNUAL REPORT

Year Ended December 31 2018 2017 2016

Supplemental Accumulated Other Comprehensive Income (Loss) Information,

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ABBOTT 2018 ANNUAL REPORT

Year Ended December 31 2018 2017 2016

Cash Flow From (Used in) Investing Activities:

Cash Flow From (Used in) Financing Activities:

Income taxes paid $÷÷÷740 $÷÷÷570 $ 620

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